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Category: academia

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I occasionally receive inquiries from high school students and others who are just beginning their study of economics and want to know how to get started on economic research. My standard advice has four recommendations:

  1. Read a good introduction to economic reasoning for non-specialists. The best one I have found is my colleague Charlie Wheelan’s book, Naked Economics.
  2. Build a foundation in three areas -- principles of economics, calculus, and probability/statistics. For those without access to the relevant AP courses, Khan Academy is a good substitute. Take a look at microeconomics, macroeconomics, calculus, and statistics.
  3. Acquire some proficiency in computer programming. It seems that most students are learning the basics in Python. There are plenty of online resources to pick that up. (And for advanced students, see QuantEcon by Thomas Sargent and John Stachurski.) Once you have the basics, you will want to switch to a language that is meant for data handling and statistical analysis. I learned on Stata (Version 0.92!) and still use it, but many people are now learning on R, which is freely available. Here's the place to get started.
  4. In some respects, those are the easy recommendations. They build your analytical and computational toolkit. That will answer some of the “what” and the “how” of economic research. But the most important question is the “why.” Good research is based on an interesting question. What questions interest you? What assertion of fact or causality have you heard in public discussions about which you are skeptical or for which you require evidence? That’s the genesis of a good research project. So read widely about the economy and society. As I discuss in this inaugural episode of Big Green Economics, economics gets better when mixed with other disciplines.

Published on Leave a comment on Diversifying the Workforce, Then and Now

Do you remember what you were doing ten years ago today? Larry Summers was at the NBER, making some remarks as president of Harvard University at a conference on "Diversifying the Science and Engineering Workforce." Those remarks, widely misunderstood in real time and even today, are posted here. Larry lays out his thesis in the second paragraph:

There are three broad hypotheses about the sources of the very substantial disparities that this conference's papers document and have been documented before with respect to the presence of women in high-end scientific professions. One is what I would call the-I'll explain each of these in a few moments and comment on how important I think they are-the first is what I call the high-powered job hypothesis. The second is what I would call different availability of aptitude at the high end, and the third is what I would call different socialization and patterns of discrimination in a search. And in my own view, their importance probably ranks in exactly the order that I just described.

It was the second hypothesis that got Larry into so much trouble. Later in his remarks, he was making a point that is illustrated by the following picture:

The point he made was that if you have two distributions of ability with the same mean but with different variances, then if you look at the extreme tails of the distribution -- here, the ability required to compete for a position in the most selective academic departments -- even a slight decrease in variance will result in a vast under representation of the less variable group. (In the picture above, imagine drawing a vertical line right where the arrow from s2 is placed -- no members from the first group are above that ability level.) Larry's second hypothesis was that the variance of the distribution of female ability was less than that of males. Suggesting in the paragraph quoted above that this had more to do with observed under representation of women in academia than his third hypothesis -- more conventional discriminatory behavior within the professions -- is likely what started the trouble stemming from the remarks. (I blogged about them ten years ago here.)

The broader issues to which Larry was speaking have not gone away.  Ignoring the statistical point in Larry's second hypothesis, his first hypothesis focused on factors that don't favor women that exist across society -- that within households, given current laws and regulations, women tend not to get the same support as men to pursue high-powered careers. The third hypothesis focused on factors that don't favor women that exist within a given profession. On this third hypothesis, my own field of economics is in the midst of some constructive reflection. Some good examples are pieces by Noah Smith in Bloomberg View in November, "Economics Is a Dismal Science for Women," and by Miles Kimball and an anonymous female co-author in Quartz earlier this month, "How Big is the Sexism Problem in Economics?"

Noah, who blogs at Noahpinion, refers to a recent article in Psychological Science in the Public Interest that draws the following conclusions about most math-intensive fields:

We conclude by suggesting that although in the past, gender discrimination was an important cause of women’s underrepresentation in scientific academic careers, this claim has continued to be invoked after it has ceased being a valid cause of women’s underrepresentation in math-intensive fields. Consequently, current barriers to women’s full participation in mathematically intensive academic science fields are rooted in pre-college factors and the subsequent likelihood of majoring in these fields, and future research should focus on these barriers rather than misdirecting attention toward historical barriers that no longer account for women’s underrepresentation in academic science.

However, the paper notes that Economics remains an outlier in a few respects, including promotion and compensation.

Miles, who blogs at Confessions of a Supply Side Liberal, goes on to provide a list of the various, sometimes subtle ways, the path to the top of the profession in economics is still steeper and rockier for women compared to men. I don't think there is a mindset within economics that is unfavorable to women. But a neutral mindset does not always lead to neutral behavior, and as a profession, this is an issue that we should all take seriously.

Published on Leave a comment on More MOOC Blogging

Echoing some of the skepticism in my most recent post on Massive Open Online Courses, Marc Bousquet writes in "Good MOOCs, Bad MOOCs" in the Chronicle's Brainstorm blog:

Good MOOC’s, in their view, foreground and sustain the social dimension of learning and active practices, i.e., knowledge production rather than knowledge consumption. To a limited extent, certain experiments in MOOC’s that foreground social media participation over “content mastery” realize some of the ideals of Siemen and Downes.

So what’s the rub? Well, the good intentions and featured best practices of Siemens and Downes exist in political and institutional realities. If institutions really wanted to sustain participatory learning, they would already be doing so, for instance, by reducing lectures and high-stakes testing, investing in teaching-intensive faculty and the like. Instead, driven less by cost concerns than a desire to standardize and control both faculty and curriculum, administrations rely more than ever on lectures and tests.

It’s hard to imagine that an education vendor, particularly one driven by profit, will do more than use Siemens’s and Downes’s excellent, sincere efforts as a tissue-paper justification for passing off cheap “social media opportunities” as a substitute for sustained interaction with working professional academics. Like their bricks-and-mortar counterparts, not to mention the community colleges and distance vendors they’re competing with, the heart of Coursera will be in lectures and tests.

That would be a shame -- a real missed opportunity to use online technology to enhance a college education.  Read the whole thing.

Published on Leave a comment on Who’s Afraid of the Big, Bad MOOC?

The latest venture into the world of massive open online courses, or MOOCs, is a new consortium of research universities headed by Coursera to offer such opportunities.  I'm all for incorporating technological advances to help deliver educational content and opportunities to students.  As I wrote in a recent newsletter on campus,

The question we should ask ourselves is now that such material and experiences can be delivered adequately, if not superbly, online and globally, what does this free us up to do in the on-campus environment?

I think there will be plenty of good answers to that question.  I see online opportunities more as complements than as substitutes for on-campus learning.  So MOOCs just don't get me riled up.  There is quite a lot still left to be determined about them if they are to substitute for what we traditionally regard as a college education. Consider these passages from The New York Times article announcing the venture:

MOOCs were largely unknown until a wave of publicity last year about Stanford University’s free online artificial intelligence course attracted 160,000 students from 190 countries. Only a small percentage of the students completed the course, but even so, the numbers were staggering.

[...]

David P. Szatmary, the university [of Washington]’s vice provost, said that to earn credit, students would probably have to pay a fee, do extra assignments and work with an instructor.

[...]

Coursera does not pay the universities, and the universities do not pay Coursera, but both incur substantial costs. Contracts provide that if a revenue stream emerges, the company and the universities will share it.

Although MOOCs will have to be self-sustaining some day — whether by charging students for credentials or premium services or by charging corporate recruiters for access to the best students — Ms. Koller and university officials said that was not a pressing concern.

[...]

One looming hurdle is overcoming online cheating.

[...]

Grading presents some questions, too.

The hurdles, open questions, and unresolved issues are all the messy parts of running a sustainable education business.

Published on Leave a comment on What Should Colleges Do?

I had several reactions to this column in the New York Times on the purpose of a college education. My perspective is that of someone who works in higher education both as a faculty member and as the director of a public policy center that offers many programs to students, both in and out of the classroom.

First, there are the usual laments in the article about the need for colleges to provide a liberal arts education as the basis of an engaged citizenry.  I wholeheartedly agree that a liberal arts education can achieve that end.  I do not necessarily agree that we are best served by having that happen in college.  More specifically, why should we use years 13-16 of a student's education to do that?  Why can we not do most of that in years 9-12 or earlier?  The confusion about what should happen in college is in part derived from a confusion or a failure of execution in earlier years.  Why not set a goal for an engaged citizenry by the time citizens are 18?  We could then relax a bit about the broader implications of whether some universities are not focused enough on the liberal arts or whether they teach some standardized curriculum.  (For more, I recommend this post from the Berkeley Blog.)

Second, the article references recent policy proposals about making the college decision more transparent or financially remunerative, particularly with an eye toward a first job after college.  I understand that federal and state governments should be looking to get their money's worth, given how much of higher education they subsidize or provide.  But I view the efforts as largely inconsequential.  There are thousands of colleges.  Most of them say up front what their philosophies are. Even acknowledging that there is not always truth in advertising, there is no impediment other than time and sophistication to picking a good match.  (This was the original motivation for the article.)  As in other markets, there are intermediaries whom you can pay to economize on your own time or compensate for your own lack of sophistication as a consumer.

Third, the most interesting part of the article is the discussion of what some schools are doing to create more interesting learning experiences through multidisciplinary courses or sequences of courses on a given topic.  This part is worth quoting:

One example, she said, is the Pathways program at Santa Clara University in California, in which students in all majors take thematically based sequences of courses that draw together several disciplines. Sustainability, the idea that the current generation can meet its needs without sacrificing future generations’, can be studied, for example, from the point of view of business, history, philosophy and politics. And at Indiana University, the Liberal Arts and Management Program offers interdisciplinary courses like “The History of the Automobile: Economy, Politics and Culture.” This program enables students to learn their specialty in the context of history, literature and other liberal arts.

“Universities need to be more creative in their thinking,” she said. And while internships can help bring a practical piece, faculty members need to oversee what is being learned and connect it back to the rest of the academic learning — something that is not done enough, she said.

This is something that we try to do at my Center in our public policy minor, but we and the rest of my institution could be more focused on thematic learning in this way.

Fourth, the most damning indictment of higher education in the article is that nowhere is the possibility of a student graduating into a life of entrepreneurship even remotely considered. Why are we not taking the smartest people and encouraging them to create something new, rather than wait in some form of a queue for a job to open up? I have taken to saying that education does not create jobs, it just qualifies you for a job. If you want to make the article author's life easier, create a system that facilitates job growth, rather than focusing on job types. This is a very important problem colleges should focus on.

Published on Leave a comment on Ezra Klein on the Ivy League’s Failures

One of the reasons I enjoy Ezra Klein's writing so much is that he will occasionally spin out a column like this one, "How Wall Street Takes Advantage of the Ivy League's Failures."  It is quite provocative, but let me reply with a question.  Has there ever been a time when the Ivy League's graduates have not gone in large numbers to the highest profile, most socially or financially rewarding occupations after college?

I'm going to venture that the answer is no.  The difference today is that the most socially and financially rewarding occupations tend to be disproportionately in finance (or Teach for America, as Ezra repeatedly interrupts himself to note).  And some of what we see in the financial industry today is grotesque, and that's what gives Ezra and the rest of us pause.

I will add, from my own point of view, that the typical Ivy League education needs to be more carefully reconsidered than what most of the Ancient Eight institutions are doing.  If you are curious to see what we are doing in this regard under my direction at the Rockefeller Center at Dartmouth, take a look at our student opportunities.

Published on Leave a comment on Econophysics

Picking up on the theme of the post on neuroeconomics, another field attempting to build bridges to economics is physics, in the form of Econophysics. Quoting from its Wikipedia page, econophysics applies ...

theories and methods originally developed by physicists in order to solve problems in economics, usually those including uncertainty or stochastic elements and nonlinear dynamics. Its application to the study of financial markets has also been termed statistical finance referring to its roots in statistical physics.

For more background, see this site or this blog. The payoff would be similar to the case of neuroeconomics--if you can link the economic problem to an analogous problem in the natural sciences that has been more thoroughly investigated, then the results of those investigations can be brought to bear in the economic problem as well. It may not be the most promising avenue of research, but academia thrives on experimentation and risk-taking in the realm of ideas.

The January 2008 issue of the Journal of Economic Dynamics and Control is a special issue on "Applications of Statistical Physics in Economics and Finance." In their introduction, J. Doyne Farmer and Thomas Lux discuss some of the reasons why the field has been slow to catch on among "mainstream" economists:

The contact between econophysics and economics has, however, been hampered by several factors. The very different culture of scientific publishing in physics and economics has generally prevented publications from econophysics in economics journals. This is partly a matter of style of presentation, but it also reflects fundamental differences in the epistemology of the two fields, in particular different views about the objectives of science. Physicists have a very different view about how work should be presented, and in particular about mathematical rigor (which they generally disdain). In addition, physics has a laissez-faire attitude about publication, believing that it is better to err on the side of letting as many new ideas in as possible, and to let the market eventually decide what is good and what is bad through a Darwinian process that selects what is useful and forgets what is not. As a result there are many econophysics papers of poor quality, which shocks economists. When combined with the fact that the best econophysics papers are published in journals that most economists never read, this body of work remains almost unknown outside the sphere of econophysics.

Communication between physicists and economists has been poor. Physicists are perhaps the only group of scientific professionals who are even more arrogant than economists, and in many cases the arrogance and emotions of both sides have been strongly on display. Many physicists have given the impression that they think that economists know little or nothing about their business, at the same time that they are asking for admission into their club. Many economists have reacted with apprehension to what they view as an attempted invasion by aliens, and have scornfully rejected any work by physicists out of hand, without bothering to have even a passing familiarity with it.

There seems to be a lot of truth in that assessment, and perhaps some of it is also applicable to the field of neuroeconomics as well. If you are interested in the links between economics and the sciences, the first article in that special issue, "Classical Thermodynamics and Economic General Equilibrium Theory," by Eric Smith and Duncan K. Foley, seems to make progress on establishing the parallels across economics and the relevant natural science. (See this working paper if you cannot access the journal directly.)

Published on Leave a comment on In Defense of (Some) Neuroeconomics

Earlier this week, Alex Tabarrok was not too impressed by a recent neuroeconomics paper that examined the neural responses to typical marketing actions for consumed goods. In this case, the authors showed that telling subjects that a wine was expensive changed the way the brain processed the experience. (Here's a popular press article on the paper. Alex provides a link to the published paper.)

I saw one of the paper's authors, Antonio Rangel, present the paper at Econopalooza this month. I had a similar reaction to Alex--this is probably not the most critical use of fMRI technology to enhance our understanding of economic behavior. However, I should also point out that there are hundreds of sessions to attend at the ASSA meetings, and two of the ones I chose to attend were the ones on neuroeconomics that featured Antonio and David Laibson. They are two of the most creative and insightful researchers in our profession, and I would make similar choices about which sessions to attend given the same menu next year.

Seeing a number of papers presented, I think David's work on hyperbolic discounting provides a better illustration of how the new technology can enhance the field of economics. In several theoretical and empirical papers over the last decade, David and his co-authors have investigated the tendency of people to act as if they have very high discount rates for choices in the near future, such as a preference for $1 today versus $1.20 tomorrow, but fairly low discount rates for choices in the more distant future, such as a preference for $1.05 in 11 years versus $1 in 10 years. This introduces a time-inconsistency problem, since what I will actually do in year 10 changes when it arrives. This is a departure from the classical model of consumer behavior. (I think the most important consequence is that it makes illiquidity a feature, not a bug, of a long-term savings account like a 401(k)). David has argued his case very persuasively, and his research is having a large impact on the way academics and policy makers think about saving.

Can neuroeconomics help him make the case? In this article in Science, he and his co-authors show:

When humans are offered the choice between rewards available at different points in time, the relative values of the options are discounted according to their expected delays until delivery. Using functional magnetic resonance imaging, we examined the neural correlates of time discounting while subjects made a series of choices between monetary reward options that varied by delay to delivery. We demonstrate that two separate systems are involved in such decisions. Parts of the limbic system associated with the midbrain dopamine system, including paralimbic cortex, are preferentially activated by decisions involving immediately available rewards. In contrast, regions of the lateral prefrontal cortex and posterior parietal cortex are engaged uniformly by intertemporal choices irrespective of delay. Furthermore, the relative engagement of the two systems is directly associated with subjects’ choices, with greater relative fronto-parietal activity when subjects choose longer term options.

The research shows that two different neural systems, which evolved for very different purposes in the human brain, deal with the two decisions. When a part of the brain is activated during a particular decision, we can infer that the decision is similar to other choices or behaviors that activate that part of the brain. The more primitive part of the brain is activated with the near-term choice. This is what gives Laibson's argument credibility. We have already learned from observation of individual choices that behavior departed from the classical model. Without the brain imaging, there could have been a number of competing theories for why this is so, many of which would not cause us to dramatically rethink the underlying model. With the brain imaging, we give substantially greater weight to the theories like Laibson's that are predicated on different decision frameworks for different types of intertemporal choices.

Published on Leave a comment on Harvard’s Financial Aid Reforms

Much has been made in the last three weeks about Harvard's decision to reduce the financial cost of attending for students from families with incomes up to $180,000 per year. Consider this article in yesterday's New York Times and a typical reaction in a Dartmouth-focused blog. I think most of the hype is overblown, particularly if it is just Harvard making this switch.

Suppose that Harvard's changes to its financial aid policies don't change the pool of applicants it receives. Then the policy simply amounts to a transfer from Harvard to some upper middle class families who send their children there, and there is no reason for any other college to change its behavior. So the impact of the policy is in the change it induces in the applicant pool to Harvard and the improvements that allows Harvard to make in its incoming class.

Who are these additional applicants? Upper middle class students who previously didn't apply to Harvard because, even if they got in, they lacked the financial resources (or the desire to spend them) to attend but who would attend under the new financial aid policies.

I'll conjecture that very few of these students are now applying to, say, Dartmouth. Compared to Harvard, Dartmouth has about the same cost, a financial aid policy that is no more generous than the Harvard's old policy, and an academic reputation that is no better than Harvard's. If financial costs were a barrier at Harvard, then they were a barrier at Dartmouth as well. So if Dartmouth chose not to match Harvard's new policy, I don't see why it would lose students out of its current applicant pool. And what's true of Dartmouth is true of colleges that are presently even less competitive with Harvard, making the opening to the New York Times article about Dickinson College a bit far-fetched. The article does identify the colleges that will see their applicant pools change:

In the competitive scramble for prestige and rankings, numerous colleges already try to lure some top students away from the Ivy League by showering them with “merit aid” even if they are well off and can afford full tuition.

The price of buying a better class just went up, so these colleges will have to modify their behavior if they still want to compete in this way. Let's assume that the higher prices discourage some (even if not all) of this behavior, generating a better applicant pool at Harvard. The better applicant pool, in turn, means a better set of applicants who do not get into Harvard. Some of the students induced to apply will get the spots that would have otherwise gone to other applicants, presumably of all financial backgrounds given Harvard's need-blind admissions policy.

And where will these newly denied applicants go? To their second-choice schools, which will include Dartmouth in some cases. So one impact of Harvard's change in financial aid on colleges like Dartmouth is that it allows them to also be more selective, even without changing their own financial aid policies.

This impact is offset to the extent that there are students admitted to both Harvard and Dartmouth that would choose Dartmouth if both cost the same but Harvard under its new financial aid policies. If it's just Harvard, then I'll conjecture again that this is a small number of students. If other colleges, very few of whom are more competitive with Harvard than is Dartmouth, follow Harvard's lead, then the set of admitted students who might be lost to their second-choice colleges will go up to the point that it would be difficult to maintain a higher price and the same quality of matriculating student.

So it is not Harvard's behavior that is important--it is the behavior of the large number of colleges that consider themselves competitors to Harvard.