Could do better: The effectiveness of incentives and competition in schools

This paper studies the effects of incentive mechanisms and of the competitive environment on the interaction between schools and students, in a set-up where the students' educational attainment depends on their peer group, on their effort, and on the quality of the school's teaching. We show that increasing the power of the incentive scheme and the effectiveness of competition may have the counterintuitive effect of lowering the students' effort. In a simple dynamic set-up, where the reputation of the schools affects recruitment, we show that more powerful incentives and increased competition lead to segregation of pupils by ability, and may also determine lower attainment in some schools.     

Multi-dimensional skills,specialization, and oligopolistic competition in higher education

This paper develops a differentiated products model of school competition that distinguishes among different dimensions that matter in the skill acquisition process. The model predicts that when identical schools compete for students, specialization may arise as a competition strategy. This serves rich students' education goals well. Poorer students, however, may attend schools with specializations that do not cater to their relative strengths. By doing so, these poorer students complement the weaknesses of the richer students through peer effects and receive financial aid in return. The empirical analysis provides strong support for the model's predictions about within-school implications of specialization.     

HIGH SCHOOLS AND STUDENTS' INITIAL COLLEGES AND MAJORS

We use statewide administrative data from Missouri to examine the explanatory power of high schools over student sorting to colleges and majors at 4‐year public universities. We develop a “preparation and persistence index” (PPI) for each university‐by‐major cell in the Missouri system that captures dimensions of selectivity and rigor and allows for a detailed investigation of sorting. Our analysis shows that students' high schools predict the quality of the initial university, as measured by PPI, conditional on their own academic preparation, and that students from lower–socioeconomic status high schools systematically enroll at lower‐PPI universities. However, high schools offer little explanatory power over major placements within universities. (JEL I2, J1)     

Reviewers for Volume 41

The authors document the types of undergraduate colleges and universities attended by those who earned a doctorate in economics from an American university from 1966 through 2003. They examine relationships between type of undergraduate institution and attrition and time-to-degree in PhD programs. The total number of new economics PhDs awarded to U.S. citizens has declined precipitously over the past 30 years. Concurrently, the number of new economics doctorates who hold undergraduate degrees from U.S. universities has fallen by half, from a high of about 800 in 1972 to about 400 in 2003. Among those who have earned undergraduate degrees from American institutions, the mix of schools attended by the doctorates has remained relatively stable, with about 55 percent of those who earn a PhD in economics each year holding their bachelor's degree from a university that offers a PhD in economics and a bit more than 10 percent holding a bachelors degree from a selective liberal arts college. Currently, 18 of the 25 American undergraduate institutions that send the largest percentage of their graduating classes on to earn a PhD in economics are liberal arts colleges. Graduates of liberal arts colleges also have shorter time-to-degree and higher verbal Graduate Record Exam (GRE) scores than other economics PhD students.     

DEMONSTRATED INTEREST: SIGNALING BEHAVIOR IN COLLEGE ADMISSIONS

In college admission decisions, important and possibly competing goals include increasing the quality of the freshman class and making the school more selective while attaining the targeted size of the incoming class. Especially for high‐quality applicants who receive multiple competing offers, colleges are concerned about the probability that these students accept the offers of admission. As a result, applicants' contacts with admissions offices, such as campus visits, can be viewed positively by the officers as demonstrated interest in the colleges. We provide empirical evidence on the effects of demonstrated interest on admission outcomes. Specifically, we use unique and comprehensive administrative data, which include all contacts made by each applicant to the admissions office of a medium‐sized highly selective university during two admission cycles. We find that an applicant who contacts the university is more likely to be admitted, and that the effect of the contact on the probability of admission is increasing in the applicant's Scholastic Assessment Test score, particularly when the contact is costly to make. We also use a numerical example to explore policies to reduce the inequity associated with the use of demonstrated interest in admission decisions, examining in particular the subsidization of costly demonstrated interest by low‐income students. (JEL D83, I23)     

Two-sided matching with interdependent values

We introduce and study two-sided matching with incomplete information and interdependent valuations on one side of the market. An example of such a setting is a matching market between colleges and students in which colleges receive partially informative signals about students. Stability in such markets depends on the amount of information about matchings available to colleges. When colleges observe the entire matching, a stable matching mechanism does not generally exist. When colleges observe only their own matches, a stable mechanism exists if students have identical preferences over colleges, but may not exist if students have different preferences.     

Teaching (un)sustainability? University sustainability commitments and student experiences of introductory economics

The three largest public universities in British Columbia, Canada have signed the Talloires Declaration, committing themselves to promoting sustainability and creating expectations that they will integrate sustainability across the curriculum in order to improve students' environmental literacy and stewardship. About 40% of North American university students take a mainstream introductory economics course; few of these students take economics at more advanced levels. As such, introductory economics courses are an important vehicle for students to learn economic theory; they have the potential to contribute to the knowledge that students can mobilize to foster sustainability. Interviews were held with 54 students who had recently completed an introductory level mainstream economics course at one of the three universities. Students reported that introductory economics courses place little emphasis on the environment and sustainability, they recalled course content with normative connotations that are problematic from a sustainability perspective and they described how discussion of the limitations of mainstream theory was set aside. Student reports of the insights introductory economics offers into environmental problems imply that these courses are failing to substantively increase students' understanding of sustainability and linkages between the environment and the economy. Findings suggest that current introductory economics curriculum undermines the universities' sustainability commitments.     

The Effects of Individual and School Factors on University Students' Academic Performance

This article examines the factors that influence university students'academic performance, focusing on the role of student background and school factors. Using data on the first‐year students at the University of Western Australia in 2001, two methodologies are employed. The first is analogous to an input‐output approach, and the second is a random coefficients model. A key finding is that high schools have an impact on the academic performance of students at university beyond students' own background characteristics. Both immersion and reinforcement effects are identified.     

The Determinants of Risk Aversion: The Role of Intergenerational Transmission

This article studies the relationship between risk attitudes and individual characteristics focusing on the intergenerational transmission of risk preferences. We use a dataset of a sample of Italian students which allows us to build different measures of risk aversion based, respectively, on a survey asking students about their willingness to invest in a risky asset and about their preferences for job security and on the results of an entry test using explicit penalty points in the case of incorrect answers. In line with the findings highlighted by the existing literature, we find that women are more risk averse than men, more patient subjects are more risk averse, while high‐ability students are less risk averse. As far as intergenerational transmission of preferences is concerned, it emerges that students whose fathers are entrepreneurs have a higher propensity to take risks, while students whose fathers are employed in the public sector are more risk averse. Only fathers matter with regards to their children's risk attitudes. These results are robust to different measures of risk aversion and to different specifications of our model.     

Human capital consequences of violence in schools: Estimating the impact of violence in schools on education outcomes in Brazil

Implementation of policies to reduce the incidence of violence in schools needs a comprehensive understanding of the phenomenon and its consequences for the victims, perpetrators, and witnesses alike. However, much of the existing literature either focuses on the impact of violence on victim students or studies the specific cases of violent conflicts. Using Brazilian education data, this paper examines the impact of violence in schools on educational outcomes of the schooling system and emphasizes the human capital consequences of recorded violent incidents in schools. First, the paper establishes the psychological stress–threat mechanism by which violent incidents in schools directly impact students' mathematics test scores as well as school level average of these test scores. Thereafter, the paper demonstrates the reduced learning mechanism by which violence further detriments the quality of education, albeit indirectly, by disengaging the teachers and students from their professional responsibilities. The main results are tested for robustness and policy implications are discussed.     

Peer effects in medical school

Using data on the universe of students who graduated from US medical schools between 1996 and 1998, we examine whether the abilities and specialty preferences of a medical school class affect a student's academic achievement in medical school and his choice of specialty. We mitigate the selection problem by including school-specific fixed effects, and show that this method yields an upper bound on peer effects for our data. We estimate positive peer effects that disappear when school-specific fixed effects are added to control for the endogeneity of a peer group. We find no evidence that peer effects are stronger for blacks, that peer groups are formed along racial lines, or that students with relatively low ability benefit more from their peers than students with relatively high-ability. However, we do find some evidence that peer groups form along gender lines.     

Early decision and financial aid competition among need-blind colleges and universities

This paper presents a stylized theoretical model of competition among need-blind colleges and universities that implement early decision admissions. Under need-blind admissions, an applicant's financial aid status cannot affect their likelihood of admission. In the model, a need-blind school can use early decision admissions as a screening mechanism to indirectly identify a student's ability-to-pay, while superficially maintaining a need-blind policy. As a result, in equilibrium, non-financial aid students are more likely to be admitted than financial aid students of comparable quality.     

Laying the Tracks for Successful Science,Technology, Engineering and Mathematics Education: What Can We Learn from Comparisons of Immigrant–Native Achievement in the USA?

This paper examines the immigrant–native achievement gap in science, technology, engineering, and mathematics (STEM) fields in college in the USA. Using student survey data from the Beginning Postsecondary Longitudinal Studies 2004/09, I find that on average immigrant students have significantly higher rates entering and persisting in STEM fields compared to their native counterparts. There is, however, considerable variation across immigrant generations and race and ethnicity. The immigrant attainment advantage is particularly large among first‐generation Asian and white immigrant students who attended foreign K–12 schools. I explore the channels leading to the achievement gap, including socioeconomic status, individual preferences, and academic preparation in math and science. Results suggest that the immigrant STEM advantage is largely due to better academic preparation in math and science in high school. This indicates that improvements in students' college STEM attainment may depend crucially on policy efforts devoted to strengthening the quality of high school math and science education.     

Online Teaching Resources: A New Journal Section

Most economics departments use end-of-term student evaluations of teaching, but the relationship between instructors' assessments of their own teaching and their students' assessments is unknown. The background survey for the nationally normed Test of Understanding in College Economics asked students and instructors to evaluate the instructor on five identical items. Using these data, the authors found that for instructors who speak English as their native language, speaking ability and enthusiasm are closely linked to self-ratings of teaching effectiveness. Students also value these traits but care more about instructors' preparation for class. Grading rigor is more important to students of instructors who speak English as a second language.     

The informational effects of competition and collusion in legislative politics

We use a mechanism design approach to study the organization of interest groups in an informational model of lobbying. Interest groups influence the legislature only by communicating private information on their preferences and not by means of monetary transfers. Interest groups have private information on their ideal points in a one-dimensional policy space and may either compete or adopt more collusive behaviors. Optimal policies result from a trade-off between imposing rules which are non-responsive to the groups' preferences and flexibility that pleases groups better. Within a strong coalition, interest groups credibly share information which facilitates communication of their joint interests, helps screening by the legislature and induces flexible policies responsive to the groups' joint interests (an informativeness effect). Competing interest groups better transmit information on their individual preferences (a screening effect). The socially and privately optimal organization of lobbying favors competition between groups only when their preferences are not too congruent with those of the legislature. With more congruence, a strong coalition is preferred. Finally, within a weak coalition, interest groups must design incentive compatible collusive mechanisms to share information. Such weak coalitions are always inefficient.     

How context matters: A survey based experiment on distributive justice

We explore distributive justice and perception of fairness using survey data from freshmen and senior students of economics and sociology. We analyse the impact of context and education on their preferences over a hypothetical distribution of resources between individuals which presents a trade off between efficiency and equality. With context giving minimal information, economics students are less likely to favour equality; studying economics influences the preferences of the subjects, increasing this difference. However, when the same problem is inserted into a meaningful context, the difference disappears. Four distribution mechanisms are analysed: egalitarianism, maximin, utilitarianism and utilitarianism with a floor constraint.     

Grain inflation: Identifying agent discretion in response to a conditional school nutrition program

Many incentive programs rely on local agents with significant discretion to allocate benefits. We estimate the degree of discretion exercised by teachers within a conditional transfer program designed to improve nutrition and encourage student attendance in Mumbai, India. The program allocates grain to students every month their attendance exceeds 80% , creating an incentive for teachers to inflate attendance to benefit certain students. We find that teachers manipulate students' records, altering the incentives to attend school. The teachers' response also varies across students. Teachers inflate more for girls, better students, and students from lower castes, but less for Muslim students.     

Local television,citizen knowledge and U.S. senators' roll-call voting

I study the effect of access to local television on citizens' political knowledge. I do so by utilizing the mismatch between U.S. television markets and state borders, causing some citizens to receive local television which primarily covers neighboring state politics. I find that access to relevant local television causes citizens to be more informed about their senators' roll-call votes, and more likely to hold opinions about these senators. I also find that citizens with access to relevant local television are more likely to assess their senators based on how well the senators' roll-call votes align with the citizens' policy preferences. These results suggest that passively acquired information through television can help individuals evaluate their elected representatives.     

Factors influencing education achievement

This study sets out to examine the factors that influence human capital formation in predominately rural communities. The results indicated that parents’ educational attainment greatly influences the quality of education for their children. Thus, consolidating smaller poor schools in which the parents have limited education above primary and secondary schools, will not likely lead to much if any improvement in students' test scores.     

Education production efficiency: Evidence from Brazilian universities

The purpose of this paper is to estimate the efficiency of higher education institutions in Brazil with emphasis on its determinants, taking particularly into account the relative efficiency of public and private institutions on the application of their resources. The availability of scores in standardized tests for Brazilian universities helps a lot with this task since they provide a widely accepted output measure. The difference between the scores of last-year and first-year students in ENADE is used to measure performance. There exists an entrance exam in Brazilian universities where they can screen out their students. Therefore we believe that students' characteristics should be considered a non-discretionary input and consequently explain the output. This specification implies that public institutions are more inefficient than private ones.