Knowledge that Transforms

Following the completion of microand macroeconomics principles courses, for which the majority of students are enrolled to fulfill requirements for other majors, economics majors take two intermediate micro and macro courses, a course in statistics/econometrics, and some field courses that may or may not include more quantitative methods (John Siegfried et al., 1991). In a national survey, Michael Watts and I found some differences between the way statistics and econometrics courses are taught and the way the other undergraduate economics courses are taught (Becker and Watts, 1996). In particular, problem sets are used more in statistics and econometrics than in other undergraduate economics courses. Curiously, however, those applications are not based on events reported in newspapers, magazines, and journals that economists read. How timely and relevant can problem sets be if they are not documented in current events? Ideally instructors set problems raised by their own research and consulting; problems students can expect to see on their jobs. After all, the rationale for teaching statistics and econometrics outside a mathematics department rests on a belief that there is something special about economic analyses. That is, economists' use of statistics is tied to the issues they face. Although the calculation of a mean and a median, for example, is the same in medicine and economics, a discussion of the average duration of economic expansions since World War II is more pertinent to those majoring in economics than is a discussion of average blood pressure or average time to dementia with mad-cow disease. The importance of economic tleory is often lost when mathematicians attempt to make situations real, as seen for example in the Chance Course (J. Laurie Snell and John Finn, 1992), where a potpourri of statistical applications are presented with no disciplinegrounded analyses. To teach students to apply the tools of statistics to actual situations and data encountered by economists, there is little justification for examples involving the drawing of balls from urns, flickng of spinners, tossing of coins, or contrived card and dice tricks. Yet these methods of generating data continue to be found in the activity-based teaching and assessment Discussants: William Greene, New York University; Robin Lumsdaine, Brown University; Kim Sosin, University of Nebraska-Omaha.

The work presented here has attempted to test the hypothesis that changing [U.S.] demographic structure has been a major factor in the changes in relative wages that have occurred over the last 30 years leading to the observed sharp decline in the wages of young adults and those approaching retirement relative to prime-age workers as well as to the decline and then steep increase in the wages of the college-educated relative to high-school graduates.... The analysis has identified pronounced effects of changing age structure on wages.... (EXCERPT)

In economics, the standard mechanism for allocating scarce resources is the market. A smoothly functioning market, however, is built upon legally enforceable contracts and property rights. In the absence of law, it is likely that violence (or the threat thereof), rather than prices, is the means by which resources will be allocated. Interactions among animals provide clear evidence for this claim. Dominance hierarchies based on fighting ability, also sometimes known as pecking orders, have been documented across a wide variety of species (e.g., primates, chickens and other birds, reptiles, lobsters) and a broad range of resources including food, nesting sites, and access to mates (Warder C. Allee, 1938; John Alcock, 1993). Evidence suggests that violence also plays a critical role in human interactions when property rights are not legally enforceable (e.g., drug dealing and extortion) (see e.g., Peter Reuter, 1983; Geoffrey Canada, 1995). In this paper, we analyze the determinants of the efficiency with which illegal markets allocate scarce resources. We develop a stylized model in which players compete for a fixed prize, with the winner determined by fighting ability. Efficiency in this context is determined by the amount of resources spent on fighting. Two factors affecting efficiency emerge from the model: lethality and predictability. Perhaps surprisingly, the use of more lethal mechanisms for resolving disputes does not have a clear impact on the social costs of violence. The intuition underlying this result is that, as the costs of losing a fight rise, the willingness to fight falls. We show that holding other factors constant, the resources spent on fighting are lowest when the cost of losing is either very low or very high (e.g., nuclear deterrence), but over a wide range of lethality levels, the overall social costs of fighting are fairly stable. In contrast, the costs of violence are critically linked to the predictability of dispute outcomes (i.e. the certainty with which potential combatants know who will be victorious ex ante). When the outcome of a conflict is highly correlated with observable characteristics such as strength or size, there is little need to actually fight. Thus unpredictability, all else equal, increases the expected payoff to fighting for the lower-ranked member, leading to more conflicts.

America is a nation filled with guns and gunowners. Using the General Social Survey, we investigate who owns guns. Gunowners resemble neither criminals nor victims, although they do hunt. Waiting periods appear to have little effect on the overall level of gun ownership, but they do lower the propensity to own guns among people who have been arrested. Living around other gunowners increases gun ownership. Guns appear to be a substitute for the legal system, because gun ownership is highest among people who do not trust the government and where the availability of police is lowest. Guns also are associated with a general taste for violent retribution.

The populations of most of the worlds countries are growing older.... The rapidly growing populations of the elderly are putting unprecedented stresses on societies because new systems of financial support social support and health care have to be developed and implemented. I will focus on a particular research thrust namely demographic analyses of survival and longevity. (EXCERPT)