Knowledge that Transforms

Research spanning three decades supports what many experienced instructors of economics have long concluded – math matters. Students with greater mathematics preparation attain higher test scores in introductory economics (Cox, 1974; Reid,1983; Lumsden and Scott, 1987; Anderson, Benjamin and Fuss, 1994; Ballard and Johnson, 2004). While all levels of competency seem to explain performance, Charles Ballard and Marianne Johnson (2004) find “mastery of extremely basic quantitative skills is among the most important factors for success in introductory microeconomics. ” Furthermore, research shows that mathematical competency reduces anxiety in economics classes (Benedict and Hoag, 2002). To the extent that anxiety may interfere with the cognitive process, an effective mechanism to correct for these deficiencies is desirable. The research supports that there may be simple methods economics instructors can use to improve students ’ learning. Common techniques include assigning a math chapter in the text, completing a math unit at the university skills center, or completing a computer unit that reviews and tests basic math skills. These alternatives, however, require effort from all students, including those possessing good math skills. Consequently, many instructors make these math assignments optional, while particularly encouraging those with weaker math skills to complete them. But this procedure is also problematic, as students most in need of the math review are often least likely to put forth effort when there is no tangible reward. An alternative strategy is to give students a grade incentive to complete a math skills program. In this paper we report on the results of a controlled experiment with random assignment which tests whether giving a grade incentive to complete a math 1 skills unit results in higher overall achievement in introductory economics. We find that students provided with the incentive get higher exam scores. The achievement gain is most noticeable for students lower in the grade distribution. Students with the weakest backgrounds and therefore with the greater marginal gains from completing the math unit are more likely to derive the benefits from that effort. I. Experimental Design

Social Value of Public Information: Morris and Shin (2002) Is Actually Pro-Transparency, Not Con: Reply by Stephen Morris, Hyun Song Shin and Hui Tong. Published in volume 96, issue 1, pages 453-455 of American Economic Review, March 2006

Many Sub-Saharan African countries are extremely poor. It has been argued that the marriage system -- in particular polygyny -- is one contributing factor to the lack of development in this region. Polygyny leads to low incentives to save, depressing the capital stock and output. Enforcing monogamy might seem like an obvious solution. However, such a law will have winners and losers. In this paper, we investigate the transition from a polygynous to a monogamous steady state.

Scholars of economic development have argued that war can have adverse impacts on later economic performance: war destroys physical capital and infrastructure and disrupts human capital accumulation, and it may also damage institutions by creating political instability, destroying the social fabric and endangering civil liberties (World Bank 2003). Understanding war’s impact on development is particularly important for Sub-Saharan Africa, where two-thirds of all nations suffered from armed conflict during the 1980s or 1990s. The proliferation of armed conflict in the world’s poorest region begs the question of what role conflict may be playing in Africa’s disappointing economic performance. Yet the net long run effects of war are ambiguous from the point of view of economic theory. To the extent that war impacts are limited to the destruction of capital, the neoclassical model predicts rapid economic growth postwar converging back to steady state growth. Several recent papers that study war impacts – including in Japan (Donald R. Davis and David E. Weinstein, 2002) and Vietnam (Edward A. Miguel and Gerard Roland 2005) – find few persistent local impacts of U.S. bombing, with heavily bombed areas experiencing rapid recovery to prewar population and economic trends. This is consistent with the neoclassical model if war’s main consequence is to destroy capital. War could also affect long run growth – either positively or negatively – by modifying the scale parameter in the neoclassical growth model. For example, while World Bank (2003) argues that war has adverse institutional consequences, Charles H. Tilly shows how war promoted state formation and nation building in Europe historically, ultimately strengthening institutions (Tilly 1975). 1 In this short paper, we study the aftermath of the recent civil conflict in Sierra Leone. One notable aspect of this project is the extensive household data for Sierra Leone on conflict experiences and on local institutions. Our results are complementary to the other recent studies mentioned above, none of which examines institutional impacts.

It has been well documented that segregation across schools — denying access to resources, inferior educational production functions, and so on — exacerbates racial differences in achievement. Using an individual measure of social connections within schools, we have shown that this form of segregation — Asian kids sitting together in the cafeteria — has a substantively unimportant relationship with academic achievement or social behavior in school or later in life. There are important caveats to our analysis: (a) our estimates of the relationship between within - school segregation and outcomes are not causal; and (b) friendships may not be the only relevant cross-race social interaction that occurs within a school.

Does democracy promote economic development? This paper reviews recent attempts to address this question that exploited within-country variation. It shows that the answer is largely positive, but also depends on the details of democratic reforms. First, the sequence of economic vs political reforms matters: countries liberalizing their economy before extending political rights do better. Second, different forms of democratic government lead to different economic policies, and this might explain why presidential democracy leads to faster growth than parliamentary democracy. Third, it is important to distinguish between expected and actual political reforms. Taking expectations of regime change into account helps identify a stronger growth effect of democracy.

We propose a simple model of trooper behavior to design empirical tests for whether troopers of different races are monolithic in their search behavior, and whether they exhibit relative racial prejudice in motor vehicle searches. Our test of relative racial prejudice provides a partial solution to the well-known inframarginality and omitted-variables problems associated with outcome tests. When applied to a unique dataset from Florida, our tests soundly reject the hypothesis that troopers of different races are monolithic in their search behavior, but the tests fail to reject the hypothesis that troopers of different races do not exhibit relative racial prejudice.

Colombia's PACES program provided over 125,000 poor children with vouchers that covered the cost of private secondary school. The vouchers were renewable annually conditional on adequate academic progress. Since many vouchers were assigned by lottery, program effects can reliably be assessed by comparing lottery winners and losers. Estimates using administrative records suggest the PACES program increases secondary school completion rates by 15 to 20 percent. Correcting for the greater percentage of lottery winners taking college admissions tests, the program increased test scores by two-tenths of a standard deviation in the distribution of potential test scores.

How do consumers choose from a menu of contracts? We analyze a novel dataset from three U.S. health clubs with information on both the contractual choice and the day-to-day attendance decisions of 7,752 members over three years. The observed consumer behavior is difficult to reconcile with standard preferences and beliefs. First, members who choose a contract with a flat monthly fee of over $70 attend on average 4.3 times per month. They pay a price per expected visit of more than $17, even though they could pay $10 per visit using a 10-visit pass. On average, these users forgo savings of $600 during their membership. Second, consumers who choose a monthly contract are 17 percent more likely to stay enrolled beyond one year than users committing for a year. This is surprising because monthly members pay higher fees for the option to cancel each month. We also document cancellation delays and attendance expectations, among other findings. Leading explanations for our findings are overconfidence about future self-control or about future efficiency. Overconfident agents overestimate attendance as well as the cancellation probability of automatically renewed contracts. Our results suggest that making inferences from observed contract choice under the rational expectation hypothesis can lead to biases in the estimation of consumer preferences.