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Saturday, February 25, 2012

If Teacher Performance Rankings Are Released to the Public

What would be the effect? New York City public schools are about to find out.
After a long legal battle and amid much anguish by teachers and other educators, the New York City Education Department released individual performance rankings of 18,000 public school teachers on Friday, while admonishing the news media not to use the scores to label or pillory teachers.

The reports, which name teachers as well as their schools, rank teachers based on their students’ gains on the state’s math and English exams over five years and up until the 2009-10 school year. The city released the reports after the United Federation of Teachers exhausted all legal remedies to block their public disclosure. 
This should make for a nice natural experiment, doesn't it? Tell me if I'm wrong but standard economic theory would predict that this should lead to better outcomes. Making teacher performance rankings public reduces information asymmetry between schools and teachers, between parents and teachers so that both parties can match up more efficiently. But what are the unintended consequences? I am unfamiliar with the literature.

The question seems relevant, now that the world is moving towards open data. Should we publish performance rankings of teachers? What about information about their salaries? My university does that, as well as, Berkeley, I hear. What about the state of liabilities and assets of government officials, the subject of increasing interest in Manila? What are the effect of such policies?

Friday, February 24, 2012

Apple IS the Stock Market

From the NYTimes
Apple, the world’s biggest company by market capitalization, fueled the ascent. The growth rate of the S.& P. 500 for the fourth quarter of 2011 was 5.9 percent compared with the quarter a year ago, and if Apple were removed from the equation, that number would drop to 2.8 percent, said John Butters, an earnings analyst at FactSet Research. Apple, which closed Friday at $522.41, is up 176 percent since June 2008.
To my finance friends, so how common is this, that the growth is fueled by only one company?

Thursday, February 23, 2012

Airline Taxes: Will It Still Be More Fun in the Philippines?

Air France-KLM couldn’t wait for Manila’s promises. The European airline discontinued its Amsterdam-Manila route starting April this year as earlier announced, after complaining of repressive taxes here in the Philippines. 
KLM had pleaded several times with the government of President Benigno Aquino III to drop the 3-percent common carriers tax and the 2.5-percent gross billings tax on cargo and passenger revenues originating in the country. Aquino was aware of KLM’s protestations and ordered Transport Secretary Manuel Roxas last year to ask the airline to reconsider its plan to stop offering the country’s remaining direct flights to Europe amid high Philippine taxes and fees. The Dutch airline, prior to canceling the direct Manila-Amsterdam route, reduced its daily flights to Amsterdam from Manila to six times a week starting Nov. 1 last year. KLM made the decision after government’s refusal to offer relief to international carriers. 
Higher taxes and the 12-percent value-added tax on crew accommodations starting Nov. 1 last year have made the direct flight service to Manila less attractive to KLM.
The full article is here.

Oh and about that 1450 pesos of airport service fee that you have to pay before an international flight? That's pretty nasty as well.

I don't mean to be negative. But this just goes to show how good policy might be more important than any ad campaign. At some point in time, I feel like there should be a debate about optimal tax policy in the Philippines. We just don't have those.

via John Nye at Twitter.

Sunday, February 19, 2012

What if Teacher's Pay was Pegged on Student Performance?

Karthik Muralidharan actually runs that 5 year experiment.
We present results from a five-year long randomized evaluation of group and individual teacher performance pay programs implemented across a large representative sample of government-run rural primary schools in the Indian state of Andhra Pradesh. We find consistently positive and significant impacts of the individual teacher incentive program on student learning outcomes across all durations of program exposure. Students who completed their full five years of primary school under the program performed significantly better than those in control schools by 0.54 and 0.35 standard deviations in math and language tests respectively. These students also scored 0.52 and 0.3 standard deviations higher in science and social studies tests even though there were no incentives on these subjects. The group teacher incentive program also had positive (and mostly significant) effects on student test scores, but the effect sizes were always smaller than that of the individual incentive program, and were not significant at the end of primary school for the cohort exposed to the program for five year.
Welcome to the world where governments are open to experimental policy. If we do not experiment, then we will never learn.

But now I see that the problem in such programs will be the incentive of teachers to cheat, which I do not think this evaluation actually addresses.

Shit Happens: The Economist Version

This is excellent.

Alternative careers I can do if I don't make it as an economist, stand up comedy. He really does have a PhD in economics.

HT to Tim Hartford

Saturday, February 18, 2012

A World Without Borders

Michael Clemens writes why a world without borders makes economic sense.
The world impoverishes itself much more through blocking international migration than any other single class of international policy... 
I document that remarkable fact in a new research paper. Large numbers of people wish to move permanently to another country – more than 40% of adults in the poorest quarter of nations. But most of them are either ineligible for any form of legal movement or face waiting lists of a decade or more. Those giant walls are a human creation, but cause more than just human harm: they hobble the global economy, costing the world roughly half its potential economic product. 
The reason migration packs such economic punch is both simple and mysterious: a worker's economic productivity depends much more on location than skill. A taxi driver in Ethiopia's capital, no matter how talented and industrious, cannot earn more than a few thousand dollars a year. The same person doing the same job in New York City can easily earn $35,000 a year. The reason people will pay him that much is that his driving adds more than $35,000 of value to the New York economy, more value than his actions can add to the Ethiopian economy.
The biggest gains to be had are where there are the biggest differences. And I cannot think of where there is greater disparity to exploit as to the difference between the wages of those who live in developed countries and developing economies.

Saturday, February 11, 2012

Why low-income parents look like worse parents

Behavioral economists chime in:
We know children born to low-income families do poorly on average. And one culprit seems to be the behavior of low-income parents 
While there is agreement on the behavior, there is little agreement on why. Why are low-income parents not giving their children as much attention, help and encouragement as they need? Different ends of the political spectrum point in different directions. The left tends to see a lack of parenting skills. They look for solutions that emphasize improving these skills. The right tends to see more personal failures. They look for solutions that emphasize getting parents to take more responsibility.... 
When cash is tight, that feeling you have when that deadline was looming, becomes a constant mental state. Well-off people have the luxury of freedom of mind. Their psychic resources are reserved for “difficult,” “important” things that have a big impact on their well- being in the long run. But those with less income are not as fortunate. They have the same (limited) capacity for self-control and attention – but are forced to expend a large fraction of it on dealing with the ups and downs of everyday life. Simply managing the basics of life uses psychic resources. This leaves less psychic resources for the important things in life. Part of the mind is constantly fretting about putting food on the table. Put in this light, is it any surprise that low-income parents look like worse parents?
It's a good read throughout and intuitive. What I'm wondering is, is this based on some rigorous academic study?

Wednesday, February 8, 2012

Freedom of Information Requests via Twitter

While the Philippines contemplates [or has stopped contemplating], the merits of instituting a Freedom of Information Act (FOIA), the UK rules that it will accept FOIA requests from citizens via Twitter.
Public authorities that use Twitter and other social networking sites must recognise that, like any other communication channel, they can be used to submit freedom of information requests provided the requester includes their real name, an address for correspondence and a description of the information requested,” the ICO spokesman said. “Whilst Twitter may not be the most effective channel for submitting an FOI request, it is important that authorities are setup to handle requests received in this way.
We are clearly being left behind by the times.

Tuesday, February 7, 2012

Golden Eagle and the Key to Grad School Admissions

EconJeff writes about the sad fact about graduate school admissions, at least for Economics. Do your statements of purpose matter?
I read through them all and managed to narrow down the choice set to about 20 strong applications. At that point, I essentially randomized because that was no more or less arbitrary than any other scheme I might have used given the extreme multi-dimensionality of the choice problem. So, I picked the applicant who said in his personal statement that his friends called him "Golden Eagle" and the one who talked in his personal statement about playing Dungeons and Dragons. I kind of intended to follow up on them to see how they did, but I lost track once I left Maryland.
But how can you blame him. It's a very competitive bunch, these people who apply to Econ PhDs. Most would have perfected the math portion of the GREs. Almost all would be top students from places they're coming from. I can attest to this, knowing about the backgrounds of students in my cohort. So how could one choose between the super top student versus the next super top student?

Flip a coin.

Monday, February 6, 2012

The Social Network Effect on Insurance Take-up

From one of the job candidates who presented here, Jing Cai from Berkeley. Her puzzle: why is there sub-optimal take-up on weather insurance products in rural China, despite heavy government subsidies? Well maybe because friends are not using it:
Using data from a two-year randomized experiment in rural China, this paper studies the influence of social networks on the decision to adopt a new weather insurance product and the mechanisms through which social networks operate. In the first year, I provided financial education to a random subset of farmers and found a large social network effect on insurance take-up: for untreated farmers, having an additional friend receiving financial education raises take-up by almost half as much as obtaining financial education directly, a spillover effect equivalent to offering a 12% reduction in the average insurance premium. By varying the information available to subjects about their peers’ take-up decisions and using randomized default options, I show that the positive social network effect is not driven by scale effects, imitation, or informal risk-sharing, but instead by the diffusion of insurance knowledge. One year later, social networks continue to affect insurance demand: observing an above-median share of friends receiving payouts increases insurance take-up at a rate equivalent to about 50% of the impact of receiving payouts directly. I also find that social network effects are larger in villages where households are more strongly connected, and when the people who receive financial education first are more central in the social network.
Of all the job talks I've attended so far, her paper is my favorite. It's crazy grad students these days are able to manage such projects of large scale. She randomized between 185 villages, and then between 5300 households within villages, and then some. Impressive. I can only imagine the logistical headache that must have been.

I take pleasure in attending these job talks. It's a rare opportunity to see everyone, the whole faculty, in one room, in full form. But scouting the competition from other schools is beneficial as well. I myself would need to do a job talk someday. And if you've ever been in one, it's not for the faint hearted, especially when the claws of the economics faculty are out.

Wednesday, February 1, 2012

Why Google, why?

I hate to say this, but my favorite company is starting to delineate borders on the internet. Unlike.
At some point “over the coming weeks,” Google’s Blogger will begin redirecting users to country-specific domain names — think in France rather than — to avoid universally removing content that would not be tolerated in specific jurisdictions. 
Readers will be redirected to sites with their own country’s domain name when they try to visit blogs recognized as foreign, as determined by their IP addresses.