Month: May 2009

Why are more colleges rewarding professorial research?

Dahlia Remler and Elda Pema are studying this question (do you know of an ungated copy?) but they don't yet have clear answers:

Higher education institutions and disciplines that traditionally did
little research now reward faculty largely based on research, both
funded and unfunded. Some worry that faculty devoting more time to
research harms teaching and thus harms students’ human capital
accumulation. The economics literature has largely ignored the reasons
for and desirability of this trend. We summarize, review, and extend
existing economic theories of higher education to explain why
incentives for unfunded research have increased. One theory is that
researchers more effectively teach higher order skills and therefore
increase student human capital more than non-researchers. In contrast,
according to signaling theory, education is not intrinsically
productive but only a signal that separates high- and low-ability
workers. We extend this theory by hypothesizing that researchers make
higher education more costly for low-ability students than do
non-research faculty, achieving the separation more efficiently. We
describe other theories, including research quality as a proxy for
hard-to-measure teaching quality and barriers to entry. Virtually no
evidence exists to test these theories or establish their relative
magnitudes. Research is needed, particularly to address what employers
seek from higher education graduates and to assess the validity of
current measures of teaching quality.

Here is an excellent summary of the piece, with discussion.

Can MR readers set them straight?  One hypothesis is that donors prefer to affiliate with research rather than with higher teaching loads and, until the financial crisis, donors have been rising in importance for many universities.

You might also claim that faculty prefer to do research, but why are faculty getting their way more than before?  (And why don't faculty just take the lower teaching load without the research requirement, if they are in charge of this evolution?)  Or are you wishing to claim that research ability is a good proxy (the best available proxy?) for teaching ability?  I doubt that.

My hypothesis draws on the tipping point idea.  Due to coalitional politics, it's hard to keep a happy medium, so the most valuable members of the department, whether defined in terms of teaching or research, push for higher research standards than they might otherwise privately favor, if they could have their way.  (This happens in both "research-teaching" departments and research departments.)  They fear that turning the keys over to "the barbarians" won't much improve teaching either.  Research prowess is one of the most efficient bases for organizing competing coalitions.  Didn't Dr. Seuss write a novel about this?

Ideally there should be a better way to keep down the losing coalition but it
is hard to find and implement in an incentive-compatible fashion.

One implication is that when growth is high, relatively tough research standards are needed to keep down the losing coalition.  When personnel is stagnant or shrinking, the emphasis on research may be less necessary because there is less chance of a shift in power.

Sonia Sotomayor and economics

Google yields this:

President Obama is apparently going to nominate Sonia Sotomayor to the Supreme Court. But, you rightly say, what is the Sports Economics angle in this story? Judge Sotomayor was the
judge who issued an injunction that said MLB teams could not impose a
collective bargaining agreement nor use replacement players
to start the 1995 season, effectively ending the 1994-95 MLB strike.

James Kwak offers some general comments.  He describes her as a "moderate" on economic issues.  And here is another source on copyright:

A lot of freelancers know the centrist Sotomayor best from NY Times Company v. Tasini,
in which a large group of freelance writers sued the Times for putting
their articles into LexisNexis without further permission or
compensation.  Sotomayor, a district judge at the time, ruled in favor of the Times
based on her interpretation of the Copyright Act of 1975. The decision
was reversed on appeal and the reversal was upheld by the Supremes — a win for the contractors, but not from Sotomayor.

Addendum: Here is a good summary article.

Measuring Criminal Spillovers: Evidence from Three Strikes

California’s Attorney General was pleased to announce that “An unintended but positive consequence of ‘Three-Strikes’ has been the impact on parolees leaving the state….The growth in the number of parolees leaving California is staggering.” Law enforcement officers in other states were presumably less pleased. A displaced criminal is a benefit to California but a cost to other states. If such criminal spillovers are important, law enforcement will over-invest in policies that encourage displacement. We test whether California’s three-strikes law led to significant criminal spillovers.

That's the abstract from my latest paper, Measuring Criminal Spillovers: Evidence from Three Strikes (with Eric Helland). In an earlier paper, Helland and found–by comparing statistical doppelgangers some subject to the law some not–that three strikes does deter (whether it deters eneough to be good public policy in less clear).  In this paper, however, we found that three strikes does not cause appreciable exit of criminals from California (or appreciable reduction in entry), i.e deterrence does not occur on the relocation margin.  During the time that California's AG spoke, everyone was leaving CA not just criminals.  One conclusion of our research is that a federalist approach to crime remains viable. 

The relative value of health care

In a 2003 study, another Dartmouth team, led by the internist
Elliott Fisher, examined the treatment received by a million elderly
Americans diagnosed with colon or rectal cancer, a hip fracture, or a
heart attack. They found that patients in higher-spending regions
received sixty per cent more care than elsewhere. They got more
frequent tests and procedures, more visits with specialists, and more
frequent admission to hospitals. Yet they did no better than other
patients, whether this was measured in terms of survival, their ability
to function, or satisfaction with the care they received. If anything,
they seemed to do worse.

That’s because nothing in medicine is
without risks. Complications can arise from hospital stays,
medications, procedures, and tests, and when these things are of
marginal value the harm can be greater than the benefits. In recent
years, we doctors have markedly increased the number of operations we
do, for instance. In 2006, doctors performed at least sixty million
surgical procedures, one for every five Americans. No other country
does anything like as many operations on its citizens. Are we better
off for it? No one knows for sure, but it seems highly unlikely. After
all, some hundred thousand people die each year from complications of
surgery—far more than die in car crashes.

To make matters worse,
Fisher found that patients in high-cost areas were actually less likely
to receive low-cost preventive services, such as flu and pneumonia
vaccines, faced longer waits at doctor and emergency-room visits, and
were less likely to have a primary-care physician. They got more of the
stuff that cost more, but not more of what they needed.

Blog on economics and comic books

Today I received this email:

I am a student of
economics in New York, an avid comic
book reader since childhood, and a big fan of Marginal Revolution.  I
just wanted to draw your attention to a blog that a friend and I have
created.  It's called Ecocomics
and deals with economics in comic books.  It's meant to be a fun read
and currently includes posts on topics such as how Two-Face
funds his crime sprees, the lucrative construction industry in comic
books, Jonah Hex and 19th century real estate, millionaires in
comic books, and Superman and labor unions.  I think you might really
enjoy it!   

Gambling on the Future

A conversation with the ten year-old.

"For the third time.  Do your homework."

"I HATE homework.  Why should I do it!"

"You need to do your homework so you can get into college and get a good job."

"Oh, Dad," (exasperated), "by the time I'm ready to go to college I'll be able to download the answers directly into my brain in twenty seconds!"

Now here is Gary Becker on fat ten-year olds.

…the negative health consequences of being overweight and even obese will generally be significantly lower for children than for adults. The reason is that aside from very extreme obesity, the really harmful effects to overweight children will not usually kick in for another 25 or more years when they are in their forties or older. However, one can reasonably expect sizable progress during the coming decades in the development of drugs, such as lipitor, that will reduce the health consequences of high cholesterol and excess weight for heart conditions, diabetes, and some cancers. From that perspective, perhaps even ignorant and impulsive children are not acting so stupidly by indulging themselves in their eating since the future will likely see the development of drugs that will alleviate many serious medical conditions.

So who is most (ir)rational, my ten-year old, the fat-ten year old or the great Gary Becker?

Waxman-Markey cost-benefit calculations

I haven't finished perusing the sources you all sent to me, but the debate is racing beyond where I started, so I will report in midstream.  My current impressions are the following:

1. Whether you agree with them or not, there are reputable studies showing aggregate benefits from a significant cutback in carbon emissions.

2. Waxman-Markey makes only a very small dent in the overall climate problem. 

3. If you carve up the aggregate benefits from #1 into parts, and
calculate an average product for various climate change policies, maybe
you can get positive net benefits from Waxman-Markey.  But a true
marginal analysis of the bill will not yield the same benefits.  A true
marginal analysis will yield benefits which are essentially zero in
terms of improved climate.

4. You can argue that taxing carbon is better than taxing work and savings, but that doesn't establish the proposition that we should be stingy enough with permits to force a (costly) move to a green economy.  Furthermore it is already the case that 85 percent of the permits (and they're not finished revising the bill) are being given away, so the revenue argument applies less and less.

5. The bill allows for "carbon offsets," which lowers the climate benefits even further and makes the bill even more unworkable.  For the most parts these offsets are not verifiable.

6. Even this watered-down version of the bill may not pass.

7. Climate benefits require that other nations follow suit and that we take numerous further costly actions over time.  I haven't seen a case that this is likely to happen and the ongoing evisceration of the bill suggests it won't.  Standard public goods arguments — beloved by environmentalists I might add — suggest that such collective action won't be forthcoming

8. Waxman-Markey defenders argue "we must do something," "this is a first step and a framework," "the people who oppose the bill are fraudsters," etc. but all that non-marginal analysis does little to address the key problem.  Those arguments may make you feel better about affiliating with Waxman-Markey, and opposing its critics, but they are not geared toward solving the problem.  Beware when non-marginal moralizing becomes so prevalent in the case for a piece of legislation.

9. If you now favor Waxman-Markey, what would have to happen to convince you that we are on the wrong track with this bill?  Is passing a positive-cost, zero-benefit measure really a good means to pave the way for future policy improvements?

10. One alternative approach is to have a revenue-neutral carbon tax (or other measures) kick in, but only if we have first captured the "low-hanging fruit," namely preserving various forests, limiting indoor emissions in poor countries, and limiting meat-eating.  That way the major costs come only if we first show that we are even a wee bit serious about addressing the problem. 

11. I am not sure that #10 is the best way forward but at least it tries to come to grips with the risk of getting only costs and no benefits.  The people who are hurling moral rhetoric at Waxman-Markey opponents should try to come up with better versions of #10 and offer very clear assessments of the likelihood of success.

Addendum: Here is a new related post.

Markets in everything

Staedtler® Antibacterial Ballpoint Pen, Two-Pack

  • Antibacterial
    additive in the barrel and grip provides a safe and effective way to
    protect against unwanted germs. Soft contoured triangular rubber grip
    ensures a comfortable writing experience.

You can buy them here.  They are especially popular in Japan and yes we have seen Japanese tourists wearing anti-flu masks in Barcelona.

What I’ve been reading

1. From London to Elista: The Inside Story of the Three Matches that Vladimir Kramnik Played for the World Chess Title, by Eugeny Bareev and Ilya Levitov.  Via John Nye, the quality and drama of this book stunned me.  Chess aside, the use of the dialogic form works remarkably well.

2. The Yacoubian Building, by Alaa Al Aswany.  Fun, philosophical, erotic, and a bestseller in the Arab world.  Many Americans don't know this book but it is worth picking up.

3. Lanark, by Alasdair Gray,  This book is as good as I remember it; I was surprised to see it has only four reviews on U.S. Amazon.  Many critics consider it the best and most creative Scottish novel of the twentieth century and of course it has tinges of science fiction and fantasy.

4. Venus in Furs, by Leopold von Sacher-Masoch.  If you are drawing inferences, keep in mind this means I had not read this book to date.  It is a source for Roissy and also has some early anticipations of behavioral economics.  Sporadically interesting, I would say.

5. Time Out Barcelona. The Time Out series is the most useful resource for urban travel, including for food.  No other guide book comes close.

Hal Varian at Google

There is a new and fun article on this topic and it turns out Varian had the same favorite novel as did Paul Krugman:

It's a satisfying development for Varian, a guy whose career as an
economist was inspired by a sci-fi novel he read in junior high. "In
Isaac Asimov's first Foundation Trilogy, there was a
character who basically constructed mathematical models of society, and
I thought this was a really exciting idea. When I went to college, I
looked around for that subject. It turned out to be economics."

The article focuses on why Google needs a chief economist.  By the way, a few weeks ago Varian and Google were kind enough to invite D.C.'s top bloggers (a stellar line-up) to a free-for-all session at Google's D.C. offices.  Being mischievous, I wondered whether a more frequently sampled version of Google Trends could be used to predict (earn?) excess returns.  The quality of the bread in the sandwiches was high and the only dessert available was a chocolate chip cookie.

I thank Chris F. Masse for the pointer.