Monthly Archives: February 2010

Kids who don’t speak English very well, say Josh Angrist and others:

12.  Who Benefits from KIPP?
by Joshua D. Angrist, Susan M. Dynarski, Thomas J. Kane, Parag A. Pathak, Christopher R. Walters  -  #15740

Charter schools affiliated with the Knowledge is Power Program (KIPP) are emblematic of the No Excuses approach to public education.    These schools feature a long school day, an extended school year, selective teacher hiring, strict behavior norms and a focus on traditional reading and math skills.  We use applicant lotteries to evaluate the impact of KIPP Academy Lynn, a KIPP charter school that is mostly Hispanic and has a high concentration of limited English proficiency (LEP) and special-need students, groups that charter critics have argued are typically under-served.  The results show overall gains of 0.35 standard deviations in math and 0.12 standard deviations in reading for each year spent at KIPP Lynn.  LEP students, special
education students, and those with low baseline scores benefit more from time spent at KIPP than do other students, with reading gains coming almost entirely from the LEP group.

This is the kind of school praised by Malcolm Gladwell in “Outliers”, which I enjoyed but did not find entirely convincing. At first glance the results looked a bit disappointing but they now seem more impressive, especially when you note that the result is per year. Make the wretches work hard, eh? (The kids, too.)

Nearly three decades ago, the Journal of Public Economics published a curious and mildly disturbing piece of research, revealing that postgraduate students of economics were more likely than others to “free ride” in a laboratory game, effectively exploiting other players for their own benefit. The discovery generated a little niche in the economics literature, exploring the question: does studying economics make you a bad person?

The prosecution has assembled quite a case. A recent survey by Yoram Bauman and Elaina Rose, two economists from the University of Washington, explains that in experiments, economics students are less generous, more likely to choose an unco-operative approach and more likely to accept bribes.

There have been a couple of contrary pieces of evidence. For instance, a study of who paid their dues to professional bodies such as the American Economic Association found that economists were more honest than sociologists and political scientists. And perhaps the budding economists are not truly mean and selfish, but are simply showing that they have mastered their studies by producing the behaviour described in simple textbook models. Arguably, the students of economics are not doing anything sinister, any more than if they calculated the roots of a quadratic equation.

The remainder of the article can be read here. Please post comments below.

Valentine’s Day is coming, and I am thinking of proposing to my girlfriend. She is beautiful, intelligent and loving, a wonderful person in every respect. I only have one concern, which is that sometimes her sensitivity tips over into anxiety. She can get easily upset or even depressed. Maybe that’s not a problem for our relationship, because I’m a very cheerful person. And opposites attract, right?
Chris, London

Dear Chris,

I am glad to hear you have such a sunny disposition. Perhaps it will rub off on your wife-to-be: James Fowler and Nicholas Christakis demonstrated not long ago that happiness was contagious. This is plausible, although similar methods have been used to demonstrate that height is contagious.

We are then left with the risk that your marriage will live under the shadow of a large happiness gap. This is unusual, because when it comes to happiness, opposites do not attract. Three economists, Cahit Guven, Claudia Senik and Holger Stichnoth, have shown that romantic partners tend to be equally happy when they get together. Worse, the same researchers also show that when one partner is much happier than the other, trouble is often in store. A happiness gap in any given year is correlated with an increased probability of separation in the subsequent year.

One may of course fret about causality: if the husband was having an affair and the wife knew about it, it would be an odd interpretation to blame the divorce on the fact that she was much less happy than him. Yet it is also true that a happiness gap in the first year of marriage is a decent predictor of divorce at any time in the future.

Guven et al point out that when a happiness gap yawns, it is usually the woman who initiates divorce proceedings. Happy Valentine’s Day.

Questions to economist@ft.com

Repayment rates are falling at the world’s most famous microfinance institution, Grameen Bank. David Roodman is worried:

  • I do not know whether Bangaldesh’s microcreditors are in major trouble. But if they are, the beginning of the end would manifest much as in the graphs above.
  • It is tempting to link the degradation in the Bank’s portfolio to the mysterious dismissal of Deputy Managing Director Dipal Barua in December. I have no evidence for a link. However, when a financial institution forces out its head of operations while key indicators are going south, it raises questions. Shareholders—in this case, mainly the Bank’s members—as well as other stakeholders deserve an explanation.
  • A crisis in Bangladesh, akin to recent ones in Bosnia and Herzegovina, Morocco, Pakistan, and parts of India, would tarnish the image of microcredit worldwide, perhaps permanently.
  • Other microcreditors should quickly match Grameen’s standards of financial disclosure so that we can get a better read on the extent of lending trouble.

Hopefully David’s fears will come to nothing, but he has established himself as a sharp-eyed and constructive critic of microfinance.

Here’s an earlier feature I wrote about the big trends in microfinance.

Some psychologists argue that it is damaging to pay children for academic performance: Barry Schwartz once attacked a New York schools pilot scheme designed by Roland Fryer with that aim in mind. (If you read to the end of Schwartz’s piece, in which he cites a couple of experiments and hammers economists for their “assumptions”, he does eventually sort-of concede that it might be appropriate to allow Fryer to run another experiment.)

Fryer tells me his results are “coming soon” and “look fascinating so far”. Until then, here’s a new paper from the NBER series:

9.  A Stitch in Time: The Effects of a Novel Incentive-Based High-School Intervention on College Outcomes by C. Kirabo Jackson  -  #15722 (CH ED LS)

Abstract:

I analyze the longer-run effects of a program that pays both 11th and 12th grade students and teachers for passing scores on Advanced Placement exams.  Using a difference-in-differences strategy, I find that affected students attend college in greater numbers, have improved college GPAs, and are more likely to remain in college beyond their freshman year.  Moreover, the program improves college outcomes even for those students who would have enrolled in college without the program.  I also find evidence of increased college graduation for black and Hispanic students groups that tend to underperform in college.  This evidence suggests that relatively late high-school interventions may confer lasting positive and large effects on student achievement in college, and may be effective at improving the educational outcomes of minority students.  The finding of enduring benefits when extrinsic motivators are no longer provided is important in light of concerns that incentive-based-interventions may lead to undesirable practices such as “teaching-to-the-test” and cheating.

This is the opposite of what Schwartz argued might happen. An intriguing follow-up to my recent column on paying for performance.

At the risk of turning this column into “The Undercover Environmentalist”, I need to return to that vexed question of carbon dioxide emissions. In my first column of the year, I vowed to reduce my carbon footprint from air travel – easy enough, given that it was 50 tonnes of CO2 last year. A kind reader wrote to reassure me that I needn’t lose any sleep, because the planes were making the journey anyway. Glib, I know: I’ve often said it myself to wind up environmentalists.

The answer reminded me of a brain-teaser that’s been entertaining me for the past couple of months. Since buses often run almost empty, two people sharing a car emit less CO2 per person than do bus passengers. Shouldn’t we then be travelling by car?

The BBC’s in-house environmental activist, Justin Rowlatt, aka “Ethical Man”, recently pondered this question and concluded that, no, he’d still be taking the bus. Why? Because the buses are making the journey anyway.

The remainder of the article can be read here. Please post comments below.

When my daughter reached the age of six, my wife and I decided to give her a small amount of pocket money. However, access to money of her own would allow her to buy herself large quantities of sweeties. So instead of giving her cash in hand we keep track of the money she’s accumulated, which she can then use to purchase anything she wants so long as it’s not food or drink.
This worked well, but for her eighth birthday a number of kind friends and relatives gave her cash. She now plans to keep this money as an ongoing sweeties budget while buying birthday presents from her saved pocket money to show her benefactors.
Short of confiscating her birthday money, is there any way we can hope to discourage this?
Outmanoeuvred parent

Dear Outmanoeuvred,

Your daughter has discovered that money is fungible. As they say in the aid industry, you may think your grant is funding your favourite project, but it’s really funding the president’s favourite project. Thus, you give money on condition that it is spent on an extra hospital, the recipient builds the hospital he was planning to build anyway, sends you the receipts and increases his expenditure on limousines and AK-47s. (Did he spend your money on the hospital or the limousines? The question is meaningless, and that’s fungibility.)

Your plan worked only while your daughter had no access to outside sources of funding.

I can see three options. You rule out confiscation. The second is to offer incentives for low sweet consumption by increasing or reducing your daughter’s pocket money. The trouble is that sweet consumption may be hard to monitor. The third is to admit defeat and let your daughter make her own choices. Sweets have costs and benefits, and your daughter appears to be a better economist than you are.

Questions to economist@ft.com

It’s always the little problems that create the biggest fuss, but in this case the Today programme’s debate on the chances of a carton of eggs all containing double yolks was unexpectedly illuminating.

Here’s the story. At about half past six, Sarah Montague and John Humphrys were debating the merits of a Daily Mail story which reported on a woman who had opened a carton of six eggs and discovered that every single one had a double yolk. The Mail went on to argue that since the chance of a single twin yolk is one in a thousand, the woman’s experience was a one-in-a-trillion event.

Sarah said that was right, multiplying a thousand by a thousand by a thousand, etc… John harumphed and said it couldn’t be true. And and hour later, they called me to referee.

This is much more interesting than it seems. If the double-yolk eggs appear with independent probabilities, then Sarah is right to multiply the thousands. The answer is one in a quintillion (or one in a trillion, if like the Daily Mail you prefer the traditional British trillion) – a number with 18 zeros. (Thinking about this some more I think the chance is actually one in six quintillion, since even when you get six double-yolked eggs, five times out of six they’ll be split across two consecutive cartons.)

On the other hand, John Humphrys was right to smell a rat – or a rotten egg. Because if the maths are correct, we are unlikely ever to have witnessed a carton of double-yolk eggs since the dawn of agriculture. And yet, several Today listeners have experienced just that.

So there are two thinking styles here. One is to solve the probability problem as posed. The other is to apply some common sense to figure out whether the probability problem makes any sense. We need both. Common sense can be misleading, but so can precise-sounding misspecifications of real world problems.

There are lessons here for the credit crunch. When the quants calculate that Goldman Sachs had seen 25 standard deviation events, several days in a row, we must conclude not that Goldman Sachs was unlucky, but that the models weren’t accurate depictions of reality.

One listener later solved the two-yolk problem. Apparently workers in egg-packing plants sort out twin-yolk eggs for themselves. If there are too many, they pack the leftovers into cartons. In other words, twin-yolk eggs cluster together. No wonder so many Today listeners have experienced bountiful cartons.

Mortgage backed securities experienced clustered losses in much the same unexpected way. If only more bankers had pondered the fable of the eggs.

I have been reading The Fourth Star by David Cloud and Greg Jaffe, two Pentagon correspondents. It’s a biography of four four-star generals, which then morphs into a history of the war in Iraq. An excellent read and a good companion to Tom Ricks’s books about Iraq, with less recent detail but a longer and more character-driven perspective on Generals Petraeus, Casey, Abizaid and Chiarelli. If you’re interested in such things, strongly recommended.

I have not, therefore, read David Owen’s “Green Metropolis“, which looks intriguing. I’m a big fan of Owen’s New Yorker piece, “Green Manhattan“, which argues – correctly – that cities are much more environmentally friendly than they seem.

I have been reading Leo McKinstry’s Spitfire: Portrait of a Legend. It’s a good read and surprisingly thorough – McKinstry doesn’t exactly have a reputation as a bleeding-heart liberal, but he takes trouble to debunk the “private sector good, government bad” myth-making behind the plane’s creation. I’ve been reading it as a case study in innovation.

As a result, I have not had time to read much of The End of Influence: What Happens When Other Countries Have the Money by Brad DeLong and Stephen Cohen. It’s a slim book and probably a good read for people interested in the political impact of economic change. I was slightly discouraged by the authors’ apparent reluctance to define what they mean by “when other countries have the money”.

(I hope that Brad DeLong one day finds the time to publish his unfinished opus, “Slouching Towards Utopia” – early drafts circulated a decade ago and were brilliant.)

The Undercover Economist: a guide

Publishing schedule: Excerpts from "The Undercover Economist" and "Dear Economist", Tim's weekly columns for the FT Magazine, are published on this blog on Saturday mornings.
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