Higher Education Finance in the UK*

The introduction of top‐up fees for home‐domiciled undergraduate tuition in England from 2006–07 – and their planned increase in 2012–13 – raises important issues for university funding in Scotland, since it abolished tuition fees for Scottish and EU students in 2000–01. This paper focuses on what the increase in resources directed at English universities arising from top‐up fees means for the relative funding of English and Scottish undergraduates. Widely‐used funding‐per‐head figures do not provide an accurate picture of home‐ and EU‐domiciled undergraduate funding, as they include funding for research, postgraduate degrees and overseas students. The empirical work of this paper focuses on creating a consistent series of funding per full‐time equivalent undergraduate over time for England and for Scotland, stripping out funding for research, non‐EU students and postgraduate degrees to create a more accurate picture of the funding gap between the two countries. It also takes into account the different composition of undergraduate degree subjects taken in England and Scotland. The findings indicate that the apparent historical advantage in funding per head in Scottish institutions compared with English ones has been largely driven by compositional differences: Scotland has a high proportion of medical, science and engineering undergraduates – subjects that command greater funding due to their relative complexity to teach. The top‐up fee introduced in 2006–07 brought funding per head in England to a level similar to that experienced in Scotland, and the future increase will result in funding per head in England outstripping that in Scotland by some magnitude. This suggests that the funding of Scottish students will fall significantly behind that of English students unless additional new sources of public or private funding for nScottish universities are found.     

BOUNDARY EVOLUTION EQUATIONS FOR AMERICAN OPTIONS

We consider the problem of finding optimal exercise policies for American options, both under constant and stochastic volatility settings. Rather than work with the usual equations that characterize the price exclusively, we derive and use boundary evolution equations that characterize the evolution of the optimal exercise boundary. Using these boundary evolution equations we show how one can construct very efficient computational methods for pricing American options that avoid common sources of error. First, we detail a methodology for standard static grids and then describe an improvement that defines a grid that evolves dynamically while solving the problem. When integral representations are available, as in the Black–Scholes setting, we also describe a modified integral method that leverages on the representation to solve the boundary evolution equations. Finally we compare runtime and accuracy to other popular numerical methods. The ideas and methodology presented herein can easily be extended to other optimal stopping problems.     

Problem-based learning: merging of economics and mathematics

We present problem-based learning as a strategy to assist students to integrate both mathematics and economics knowledge as well as develop other skills. We present basic information about problem-based learning, provide an example of an economics problem that could be used in an early undergraduate mathematics course, and provide sources for additional economics problems and information about problem-based learning. While faculty will seldom have a class composed entirely of economics students, the examples that we provide do not require in-depth knowledge of economics but will help undergraduates develop some understanding of the economic world they live in.     

Pastoral Livelihoods in Tanzania: Can the Maasai Benefit from Conservation?

The Maasai pastoralists of Northern Tanzania live in areas of unique conservation value. There is a widespread belief dating from colonial times that Maasai cattle herding is unproductive and detrimental to the region's wildlife. The increase in the Maasai population has fuelled this belief and has led to their exclusion from their traditional land and a breakdown in their land management strategies. This decreases their capacity to maintain a livelihood, and so they must turn to non-traditional methods. This paper looks at how the Maasai have been excluded from their lands and why this has caused traditional livelihoods to become unsustainable. It then goes on to suggest that community-based tourism offers possible alternative sustainable solutions both to the Maasai and to conservationists.     

The 1989–92 Credit Crunch for Real Estate: A Retrospective

This study surveys a broad range of information to establish the degree to which real estate lending and construction activity decreased in the 1989–92 period owing to a "credit crunch." It reviews the conditions that led up to the contraction in mortgage lending and construction and then documents the extent to which the evidence is consistent with a credit crunch in lending for residential and nonresidential construction, permanent financing of income properties, and residential mortgage lending. Also, this study weighs the relative importance of the credit crunch and other factors that contributed to the falloff in real estate lending and contrasts the recent period with earlier credit crunch episodes.