Estimating demand systems when outcomes are correlated counts

We describe and employ a Bayesian posterior simulator for fitting a high-dimensional system of ordinal or count outcome equations. The model is then applied to describe the multiple site recreation demands of individual agents, and we argue that our approach provides advantages relative to existing methods commonly applied in this area. In particular, our model flexibly adjusts to match observed frequencies in trip outcomes, permits a flexible correlation pattern among the sites visited by individuals, and the posterior simulator for fitting this model is relatively easy to implement in practice. We also describe how the posterior simulations produced from the model can be used to conduct a variety of counterfactual experiments, including predicting behavioral changes and describing welfare implications resulting from shifts in exogenous demographic and site characteristics. We illustrate our method using data from the Iowa Lakes Project by modeling the visitation patterns of individuals to a set of twenty-nine large Iowa lakes. Consistent with previous findings in the literature, we see strong evidence that own and cross-price effects on trip demand are negative and positive, respectively, that higher income increases the likelihood of visiting most sites, and that a commonly used indicator of water quality, Secchi transparency, is positively correlated with the number of trips taken. In addition, the correlation structure among the errors reveals a complex pattern in which unobserved factors affecting trip demand are generally (though not strictly) positively correlated across sites. The flexibility and richness with which we are able to characterize the demand system provides a solid platform for counterfactual analysis, where we find significant behavioral and welfare effects from changes in site availability, water quality, and travel costs.     

A finite‐sample hierarchical analysis of wage variation across public high schools: evidence from the NLSY and high school and beyond

Using data from both the National Longitudinal Survey of Youth (NLSY) and High School and Beyond (HSB), we investigate if public high schools differ in the “production” of earnings and if rates of return to future education vary with public high school attended. Given evidence of such variation, we seek to explain why schools differ by proposing that standard measures of school “quality” as well as proxies for community characteristics can explain the observed parameter variation across high schools. Since analysis of widely‐used data sets such as the NLSY and HSB necessarily involves observing only a few students per high school, we employ an exact finite sample estimation approach. We find evidence that schools differ and that most proxies for high school quality play modest roles in explaining the variation in outcomes across public high schools. We do find evidence that the education of the teachers in the high school as well as the average family income associated with students in the school play a small part in explaining variation at the school‐level. Copyright © 2002 John Wiley & Sons, Ltd.     

Multiproduct Cournot oligopoly

We study a Cournot industry in which each firm sells multiple quality‐differentiated products. We use an upgrades approach, working not with the actual products but instead with upgrades from one quality to the next. The properties of single‐product models carry over to the supply of upgrades, but not necessarily to the supply of complete products. Product line determinants and welfare results are presented. Strategic commitment to product lines is considered; firms may well choose to compete head‐to‐head.     

Hiring for smarts

Yes, it's nice when a leader is charismatic and confident. And a great resume can tell you a lot about a person's knowledge and experience. But such assets are no substitute for sheer business intelligence, and they reveal very little about a leader's ability to consistently reach the "right" answer. How can hiring managers flag individuals with such smarts? Historically, the only reliable measure of brainpower has been the standard IQ test, which is rarely used in business settings because of the specific subjects it tests for-math, reading, and spatial reasoning-and because of its multiple-choice format. Despite its shortcomings, the standard IQ test is still a better predictor of managerial success than any other assessment tool companies currently use, Justin Menkes argues. It's true that there isn't a version of IQ testing that applies to the corporate world, but in rejecting IQ tests altogether, hiring managers have thwarted their own attempts to identify true business stars. The author defines the specific subjects that make up "executive intelligence"-namely, accomplishing tasks, working with people, and judging oneself. He describes how to formulate questions to test job candidates for their mastery of these subjects, offering several examples based on real situations. Knowledge questions, such as those used in standard behavioral interviews, require people to recite what they have learned or experienced; intelligence questions call for individuals to demonstrate their abilities. Therefore, the questions in an executive intelligence test shouldn't require specific industry expertise or experience; any knowledge they call for must be rudimentary and common to all executives. And the questions should not be designed to ask whether the candidate has a particular skill; they should be configured so that the candidate will have to demonstrate that skill in the course of answering them.     

The Role of Shocks and Institutions in the Rise of European Unemployment: the Aggregate Evidence

Two key facts about European unemployment must be explained: the rise in unemployment since the 1960s, and the heterogeneity of individual country experiences. While adverse shocks can potentially explain much of the rise in unemployment, there is insufficient heterogeneity in these shocks to explain cross-country differences. Alternatively, while explanations focusing on labour market institutions explain current heterogeneity well, many of these institutions pre-date the rise in unemployment. Based on a panel of institutions and shocks for 20 OECD nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts.     

Where no cars go: Free-floating carshare and inequality of access

Carsharing programs have demonstrated a potential to significantly shift incentives with regard to private vehicle ownership. The advent of free-floating vehicle fleets has enabled providers to offer ubiquitous vehicle access in designated urban areas. The ability of users to choose where to drop off vehicles presents the possibility that the density of available vehicles in particular areas will be insufficient to supply a reasonable level of service to local residents. The current paper will use exclusive data on vehicle location from a free-floating carshare service that operates in ten U.S. cities. Analysis will relate the availability of vehicles to census tract demographics. Results show vehicles cluster in tracts that are disproportionately populated by residents who are educated, young, employed, and white. Carshare systems have received significant in-kind incentives from government to operate. The mobility benefits of free-floating carshare systems appear to accrue disproportionately to advantaged populations.