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Education Research String at Awkward Utopia



Education Research String

I would like to submit this post as an umbrella for comments that might have for our UES School project or web links for others to read.

36 Responses to “Education Research String”


  1. 1 Admiral Jun 2nd, 2007 at 6:53 pm

    http://www.economist.com/business/displaystory.cfm?story_id=9261810

    I like this idea a lot. UES has been a fan of such markets for as long as I can remember, but such an idea might help us be more responsive to a few markets: employers, parents, and even students, for perhaps our curriculum or cruise ship menus. ;)

  2. 2 monocrat Jun 3rd, 2007 at 1:30 pm

    All I have to say is this: FINGERPAINT!

  3. 3 Matt Jun 3rd, 2007 at 4:54 pm

    I really like that technology, but I really hope Microsoft isn’t the one who delivers it to us…ughhhhh. One of the best parts of this touch technology is possibility for highly intuitive interfaces, something I just don’t think Microsoft can pull off…Exhibit 1 (btw, this is one of my favorite videos ever, seriously).

    Exhibit 2: Vista. I overheard this conversation in my class last week:
    Girl: “I got an external hard drive a couple months ago.”
    Boy: “Wow!”
    Girl: “Yeah, but then I got a new computer last week, with Vista and everything.”
    Boy: “Exciting.”
    Girl: “Well, the hard drive doesn’t work with Vista. I thought Vista was supposed to fix everything!”

    I LOL’d. I just hope Apple will be able to adapt their iPhone et al operating system to the desktop touch screens and applications.

  4. 4 Admiral Jun 5th, 2007 at 5:42 pm
  5. 5 monocrat Jun 5th, 2007 at 11:13 pm

    The Committee might find the following FLDOE links of use:
    Detailed Requirements for Private Schools, from the state Office of School Choice. For a general overview of Florida’s school choice regime (and also for a look at state propaganda) I also recommend you peruse the School Choice Options (PDF) report.

    Pages on:

    Anyone feel like taking a stab at mapping our potential competition?

  6. 6 slade Jun 7th, 2007 at 1:25 pm

    i have some experience with the accreditation process, but i think that’s fairly unimportant for us. the state doesn’t require that elementary schools be accredited (in the case of the school i worked with, the process didn’t start until four years after the school opened, and i think the accreditation came from an organization of catholic, rather than generically private, schools anyway). feel free do disagree with me on this one though.

    what do you mean by mapping the competition?

  7. 7 monocrat Jun 7th, 2007 at 2:19 pm

    I imagine accreditation is something we will want to obtain, if only as an advertising resource to impress parents. As for mapping the competition, I had the idea that locating in the central business district or near a major employer would be good for business; I’d like to see where and if the competition clusters.

  8. 8 slade Jun 8th, 2007 at 1:34 pm

    i don’t know if it’s possible to get a school accredited before it’s actually up and running… i’ll see what i can find out.

  9. 9 slade Jun 8th, 2007 at 4:54 pm

    i found two things… the association of independent schools of florida’s academic schools accreditation program (http://www.aisfl.com/asap_1.html), and the national independent private schools association (http://www.nipsa.org/index.html). in the case of the latter (just as an example), the school must be at least two years old before applying for candidate status, which only then allows it to obtain accreditation. i don’t know how detailed we want out business plan to be, but we can, i’m sure, incorporate the process (which involves forming a committee of teachers and parents to create a school improvement plan, among other things) into our timeline and budget.

  10. 10 Admiral Jun 8th, 2007 at 6:56 pm

    http://www.economist.com/displaystory.cfm?story_id=9304272

    Outsourcing our vaunted linguistic education. Bargain rates and convenient times.

  11. 11 Admiral Jun 11th, 2007 at 5:11 pm

    http://www.studentagencies.com/corp/

    Related to the Big Red Shipping I’d mentioned

  12. 12 Admiral Jun 13th, 2007 at 3:48 pm
  13. 13 slade Jun 13th, 2007 at 5:57 pm

    i posted a week or so ago about accreditation, by the way. i don’t know why my comment didn’t show up, but the point was that the accreditation process doesn’t start until the school has been open a couple of years. so we can incorporate the steps we’d take to get accredited into our business proposal’s time line, i suppose. that should be easy enough.

  14. 14 Admiral Jun 15th, 2007 at 3:30 pm
  15. 15 monocrat Jun 18th, 2007 at 4:54 pm

    Gender-specific education. Something for us to consider?

  16. 16 Matt Jun 18th, 2007 at 10:01 pm

    The gender-specific education link does not work :(

  17. 17 monocrat Jun 18th, 2007 at 11:00 pm

    The link is fixed. Apologies. Additionally, to follow my own request from last week, I have done some light reading on curriculum design. In their spirits, I think Milton and Locke closely align with our objectives: chiefly to cultivate honorable, intelligent gentlemen and -women. (These are both fairly short reads; see also the Wikipedia article on Locke’s piece for context on the very brief treatise.) The specifics will need the be ironed out, though.

  18. 18 Matt Jun 27th, 2007 at 1:35 pm

    Regarding our mathematics teaching:

    Something like our idea was done in the late 60’s, called New Math. They introduced set theory and arithmetic in bases other than 10. I haven’t been able to find more details on the actual curriculum yet….

    The reform apparently failed. Here are the reasons I’ve gathered why:

    1. Parents lobbied against it because they were embarrassed to be unable to help their children with their homework; parents claiming “this isn’t what we learned”
    2. Textbooks were written by school teachers.
    3. Teachers were unprepared for the change.
    4. Instead of simply adding the new concepts to the traditional arithmetic lessons, the new ideas replaced drills.
    5. Because of 2 & 3, they taught the abstract ideas incorrectly or ineffectively.
    6. Emphasis on high test scores as the ultimate desired outcome.

    This entire episode is more a condemnation of the existing system than an indication that young students are unable to learn these concepts.

    My thoughts:

    Addition in different bases is more archaic than abstract, and should not be introduced in our primary curriculum. Certainly we want to emphasize addition as an abstract idea, but not just by adding integers in a different base or cardinalities of finite sets. Furthermore, mathematicians started with integers and created abstract algebraic structures by generalizing the properties of integers (e.g. commutativity, identities, etc.). Hence a solid knowledge of the usual integer operations is quite important and the abstract ideas should build on and complement this knowledge, not replace it.

    Anyway, I have confidence that we can succeed where the state failed.

    Here are some links: A timeline; What was the new math?; Wikipedia

  19. 19 Matt Jul 1st, 2007 at 2:15 am

    Also regarding the mathematics education:

    I forgot to mention this in my last post. Serge Lang, a prolific mathematician, wrote Basic Mathematics after he read some of the standard high school mathematics books. From what I’ve seen I like this book a lot. Perhaps we can use it for our upper primary and secondary curriculum. Here is the Google books link where you can read some pages.

    Also, here is a link to some mini-texts that Steven Roman wrote called Modules in Mathematics. They’re somewhat old, but perhaps we can use them as a model or a starting point for our texts. These are also for secondary/upper primary.

    I don’t imagine we’ll really have real texts at the lower primary level. Perhaps they will simply be more like workbooks.

  20. 20 Admiral Aug 3rd, 2007 at 12:44 am

    Thanks Robert, that is very very interesting and will help with our figures a lot.

    As for the math posts, sorry I didn’t notice these before. I kinda like Basic Math, but I don’t see much of a difference between it and every other textbook that I ever used. I don’t think anyone should learn quadratic equations or squares without understanding the underlying geometrical bases of these concepts. In other words, people need to understand the visualized, real elements to what they are learning. With complex numbers, it gets a little more difficult, but we ought to find a way — or find someone who already has. Thoughts?

    Oh, and as for my homework, I have gotten through half of the papers I took home from UES. Just started reading em because I have been really busy. I will have a post up either sometime tonight or tomorrow summarizing/highlighting relevant points.

  21. 21 Admiral Aug 5th, 2007 at 2:07 am

    1. Intraschool Variation in Class Size (2001)
    By: Boozer and Rouse

    p. 168: density of class size by achievement level in class: large slope increase in density of high performers classes between 20-35 students. Otherwise, not very dense classes. Not as striking slopes for lower achiever classes.

    p. 169: caveats on class size variable

    p. 171: students w/ lower test scores disproportionately assigned to remedial, thus smaller, classes

    p. 175: instrumental variable: pupil-teacher ratio

    p. 176-7: results suggest students in larger classes have lower test scores, particularly 8th grade, but there’s less confidence in evidence from 10th to 12th

    p. 178: may overstate effect if individuals w/ preference for schooling move to states w/ demonstrated commitment to schooling or vote for measures to increase school quality

    p. 179: very odd inclusion of (g) factor

    p. 181: reasonable estimate of class size effect, or of school quality more generally of class size is correlated w/ other dimensions of school quality that are also correlated w/ student achievement (?)

    p. 181: what fraction std. dev. of test score gain distribution is generated by a one student decrease in avg. class size?

    p. 181: our effect 1.5x larger than median effect in literature. Effect in upper quartile of literature results, but not extreme.

    p. 182: if minorities more likely placed in remedial classes, then pupil-teacher ratios used by others to explain racial gaps in achievement may mask differences in class sizes that may appear were we to hold class size constant

    p. 183: to extent minorities disproportionately represented in larger high achiever and smaller remedial classes, pupil-teacher ratio and average class size may not accurately reflect schooling inputs

    p. 186: moving African-American to avg white class size: 37% of achievement gap. 70% comes from family differences. Over 100% for Hispanics too.

    p. 188: monotonic fall in black-white differences in pupil-teacher ratio since 1915, but only 1/2 accountable by class size. But smaller compensatory classes combined with larger regular classes may explain such (word illegible)

  22. 22 Admiral Aug 5th, 2007 at 2:13 am

    2. Interpreting Instrumental Variable Estimates of Returns to Schooling (2001)
    By: Kling

    p. 358: IV estimates provide strategies to solve the identification problem arising when an individual choice of educational attainment is related to his or her earnings. Usually (word illegible) subgroup –> differences among subgroups

    p. 363: recent work shows market for higher education more geographically integrated. Presented evidence such as deregulation of airline / telecom and tuition reciprocity amongst state public schools. Standardized admission and financial aid, National Merit also helped integrate.. So: absolute cost goes down, but relative costs go waaaaay down because traveling, communication, room and board have gone down as share of cost of education as a whole while tuition shoots up

    p. 364: returns to education about 10-14% for individuals whose schooling is affected by the IV of distance to colleges, as opposed to usual 8%

    p. 364: Disadvantaged most strongly influenced

    p. 364: Causal effect? Not sure. No effect revealed for 2 year colleges, only 4 year.

  23. 23 Admiral Aug 5th, 2007 at 2:28 am

    3. Interpreting Sheepskin Effects in Returns to Education (2007)
    By: Flores-Lagunes y Light

    p. 2: employers use credentials to identify workers w/ desirable traits that cannot be directly observed

    p. 2: sorting vs. human capital debate

    p. 2: sheepskin effects here: defined as wage gap between credentialed and non-credentialed workers conditional on years of schooling; years of schooling vary among individuals w/ a given degree

    p. 3: human capital model: (1) individuals differ in ability, (2) high ability get more out of yr of schooling than one of low ability, (3) degree awarded once skill threshold reached

    p. 4: holding employment constant; Becker –> terminate schooling when MB = MC

    p. 17: an additional year of schooling for all workers gives all workers 2% wage boost; time in school positively correlated w/ skill for dropouts but negatively correlated w/ innate ability for degree holders

    p. 19: degree holders earn 3% less for every extra year they take to graduate based on “age at school exit” classification, but not “highest grade completed”

    p. 19: for dropout categories, the reverse is true

  24. 24 Admiral Aug 5th, 2007 at 2:37 am

    4. Does Teacher Testing Raise Teacher Quality (2007)
    By: Angrist and Guryan

    p. 3: evidence on relationship between salaries and measures of teacher quality is mixed. In spite of efforts to boost pay, teacher aptitude measured by standardized test scores has fallen since 1960. [Ed: measuring quality by these other variables is difficult.]

    p. 3: result of teacher testing ambiguous. Requirements set minimum standard for the actual stuff on the test, but also deter high quality applicants, and raise labor costs.

    p. 4: no evidence teachers hired in state testing regimes more likely to be drawn from more selective colleges or to teach material studied in college or graduate school. Also, reduced Hispanic representation among labor force.

    p. 5: licensing potentially raises costs to entry

    p. 5: little evidence of consumer benefits of mandatory licensing even for medicine

    p. 5: more Americans affected by licensing than belong to unions or get minimum wage

    p. 5: SAT scores went down in states w/ mandatory Masters requirement. It’s costly, so talent would go to better, less-costly alternatives.

    p. 6: states w/ heavily regulated entry had no better dental health than the states with less regulation, but those states did have increased dental salaries and consumer cost

    p. 7: tests are noisy predictors of worker quality and are costly; teacher supply shift is because of time and effort

    p. 11: average institution SAT often used as measure of new teacher quality

    p. 15: state testing requirements associated w/ slightly higher wages of 2.4-3.4%

    p. 17: states weaken requirements when teachers hard to find

    p. 19: fact that most applicants pass could well explainw eak effects of state test requirements in quality distribution

    p. 21: obvious possibility that undergraduate college selectivity not a powerful measure of “teacher quality”; though there IS evidence of variation in teacher quality as determinant of student achievement [I'd been thinking this the whole paper, and you would too -- we all got ripped off by this paper being in existence. We should write a paper, the opposite of sheepskin effects -- College of Education effects, standardizing and flooring all skill sets.]

    p. 24: teachers employers pay surprisingly little attn to selectiveness of applicants undergrad institution

  25. 25 Admiral Aug 5th, 2007 at 5:26 pm

    5. On the Efficiency of Standard Form Contracts (8/2003)
    By: Chakravarty & MacLeod

    p. 2: active market for construction contracts (K) as organizations sell them for all aspects of construction, therefore they are de facto standard, governing about $1 trillion in construction, most widely used K: AIA’s

    p. 3: default: most ex post bargaining power should go to Principal (P)

    p. 3: AIA recommends fixed price K w/: (1) Agent (A) selected by competitive bidding process, (2) P can make minor changes ex post w/ no cost [Ed: in other words, if there is no cost to making the change], (3) A obliged to carry out major changes, but on a cost-plus basis, (4) A has right to organize process of construction as s/he wishes, (5) A required to correct all defects, the P may lower the price in lieu of performance

    p. 3: this process should ensure lowest cost; but puzzling feature of AIA K is the scarce guidance regarding size of price decrease in lieu of performance, as w/o agreement may go to arbitrator or court

    p. 4: standard rule should be: expectations damages

    p. 5: $3.5-$18 for AIA K

    p. 6: contractors usually by sealed bid auction; then after selection may try to raise price

    p. 6: to deal with threat of non-performance, contractors must post bonds. Also performance bond if unfinished.

    p. 16: cost-plus K

    p. 17: fixed price K w/ renegotiation

    p. 19: fixed price K w/ remedies

    p. 21: common to include some cost-plus terms to a fixed price AIA K to minimize some risks

  26. 26 Admiral Aug 5th, 2007 at 5:28 pm

    6. Stock Options and Employees’ Firm-Specific Human Capital Under the Threat of Divestiture and Acquisition (7/01)
    By: Osano

    I didn’t find this paper very interesting, revolutionary, or worst of all, useful. Here is the abstract, since it is of some scant consideration:

    First-best level of firm-specific human capital investment is achieved by a stock option plan w/ a positive exercise price for workers conditional on the event of divestiture and acquisition. Under certain conditions, stock offer in acquisition can resolve collusion in which target firm colludes with workers in attempt to raise the acquisition tender price up to level consistent w/ first-best level of investment even though workers actually choose an inefficient level of investment.

    Maybe some kind of application to our point system… ::shrugs::

  27. 27 Admiral Aug 5th, 2007 at 5:32 pm

    7. Benefits and Costs of Integrating Online Web to Principles of Economics (1998)
    By: Maxwell, Lima, Huntzinger

    This paper is very dated, considering the state of the internet at the time and the degree of integration it had into our society. I find this paper extremely unsatisfactory for most aspects, as it clearly wildly overestimates the costs to using the web in a course. Nevertheless, it has some potentially useful info we can use in our selling of the program. We’re relying less on gimmicks, more on old fashioned critical thinking and so on.

    p. 1: studies show internet increases access but doesn’t enhance learning

    p. 3: median economics instructor spends 83% time at board [very lecture based because it supposedly has to be they say, whereas we also are integrating practice]

    p. 10: Learning & Participation significantly lower in the online class than in the traditional on-grounds classes, either with or without web augmentation. Proportion of students dropping the class did not differ.

  28. 28 Admiral Aug 5th, 2007 at 5:52 pm

    8. Natives, the Foreign-Born and High School Equivalents: New Evidence on the Returns to the GED (4/2002)
    By: Clark and Jaeger

    p. 1: sheepskin effects support the signal side in the signal vs. human capital debate of estimated return to education; recent research supports sheepskin effects

    p. 1-2: we find that the wages of GED recipients are substantially larger and statistically significantly different from those of high school dropouts. Moreover, we find that the wages of foreign-born, foreign-schooled GED recipients are substantially greater than the wages of individuals who received a traditional high school degree outside of the US. GED may be important in the assimilation of low-skilled migrants to the US labor market.

    p. 2: most previous studies dismiss possibility that individuals preparing for the GED acquire significant levels of human capital, although over 24% of test-takers spend more than 100 hours preparing for the exam, so it is possible they do so.

    p. 10: both native men and native women with a GED earn approximately 8% less than their counterparts with a high school diploma, although the diff varies across ethnicity, blacks having the smallest diff

    p. 10: for the foreign-born, the pattern is reversed. The GED premium for foreign-born, foreign-schooled men is nearly twice as large as that for native men, while for women this premium is about 50% larger. Because the HS premium is lower for the foreign-born, foreign schooled than for natives, the traditional HS diploma-GED difference is negative for the foreign-born, foreign-schooled. This effect is significant for men, not for women. Also, for men, GED holders earn more than those with a traditional high school diploma, while for women the opposite is true.

    p. 11: Because foreign-schooled dropouts have substantially less education than those who receive a GED, part of the diff in conditional mean wages between these groups may be due to diffs in formal schooling levels.

    p. 12: Taken as a whole, the results suggest that wages of GED recipients are closer to HS diploma recipients than dropouts, contrasting findings… who find no statistically significant sheepskin effects of the GED.

    p. 12: Our results, particularly for the foreign-born, foreign-schooled, suggest that obtaining a GED may be a path towards higher earnings, [but] there are also a variety of reasons to be cautious in our conclusions.

    p. 16: whether our results represent the presence of signaling in the labor market for low-skilled workers is, of course, open to debate. We find it plausible, however, that firms would take a US-specific credential like the GED as a greater signal of productivity in the US labor market than a traditional HS degree earned elsewhere. Further progress on these issues for the foreign-born will require additional data on the ability of individuals (e.g. test scores and English-language skills), the qualities of schools that they attended, etc.

  29. 29 Admiral Aug 5th, 2007 at 6:21 pm

    9. What’s a Dropout to Do? Coping with the Deterioration of the Low-Skilled Labor Market (7/2002)
    By: Platt & Farber

    p. 1: changes in the US labor market over the past 25 yrs have made steady employment in “good” jobs more difficult for HS dropouts. (Well-known widening of earnings dist. between the 70s and 90s largely reflects a dramatic deterioration in earnings and employment opportunities for the least skilled. … Workers with less than 12 yrs of education earned about 26% less in real terms in 1995 than similarly educated workers in 1976.)

    p. 2: std static def of dropout is someone who left school in a given period w/o completing the program. This measures flow of individuals out of school prior to completion, but no info on subsequent re-entry. … Using data from NLSY-79, Chuang (1997) found that 45 percent of young people who left HS before completing 12th grade returned to school in the next 7 yrs.

    p. 3: as initial dropouts mature, some will return to school relatively quickly and not “qualify” for long-term dropout status. How those who become long-term dropouts fare int he labor market and their ultimate schooling decisions are the central focus of this analysis.

    p. 7: although the attainment of college degrees for males as a whole has been monotonically increasing through the 70s and 80s, for men ages 25 through 29 the percentage of the population holding col. degrees peaked in 1975. … the higher level of educational achievement shown by the dropouts in the NLSY-79 cannot be attributed to a general increase in educational attainment.

    p. 8: it may be that the higher level of permanent ed. attainment among dropouts in the NLSY-79 is that GEDs became more easily available

    p. 9: dropouts in the earlier period had average working rates of 80 percent or greater at every age between 20 and 34, while dropouts in the later period had lower avg working rates at every age. The decline in age-specific working rates was particularly large at younger ages. The decline was over 20% for ages 20-23 and fell to about 10% for older workers.

    p. 11: dropouts from the NLSY-79 return to school at more than 2x the rate as those in the NLS-YM. Among long-term dropouts in our samples, the return rates were 12% in the NLS-YM and 23% in the NLSY-79. One way to model a dropout’s decision to return to school is to compare the costs and benefits of acquiring further education. The costs consist largely of foregone earnings during the period of schooling, and the benefits are largely in the form of higher wages and enhanced employment prospects. This model suggests a ready explanation for the increased return-to-school rate between the 60s and 80s.

    p. 23: the deterioration of labor market conditions can account for almost half of the increase in the re-enrollment rate for dropouts between the 60s/70s and 80s/90s. This is consistent with the std human capital investment model, where an increase in the return to education (largely “caused” by the deterioration in earnings and employment for the less educated) motivates dropouts to return to school.

    So now we have papers supposedly supporting both signaling and human capital models. I think that this material can be used for a lot of different purposes in honing and marketing our product.

  30. 30 Admiral Aug 5th, 2007 at 8:28 pm

    10. Estimating a Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables (10/2002)
    By: Dale & Krueger

    This paper was a citation in one of the papers reviewed above.

    p. 1491: A burgeoning literature has addressed the question, “Does the ‘quality’ of the college that students attend influence their subsequent earnings?”

    p. 1492: Past studies have found that students who attended colleges with higher avg SAT scores or higher tuition tend to have higher earnings when they are observed in the labor market. Attending a college with a 100 point higher average SAT is associated with 3 to 7% higher earnings later in life. An obvious concern with this conclusion is that students who attend more elite colleges may have greater earnings capacity regardless of where they attend school. Indeed, the very attributes that lead admissions committees to select certain applicants for admission may also be rewarded in the labor market.

    p. 1499: an alternative though related approach to modeling unobserved student selection is to assume that students are knowledgeable about their academic potential, and reveal their potential ability by the choice of schools they apply to.

    [Most of the study's models fail to find a financial return to school selectivity.]

    p. 1512: Another explanation for the lack of return to school selectivity is that students who attend more selective colleges tend to be ranked lower in their graduating class than they would have been if they had attended a less selective school because of greater competition…. … students who attended a college with a 100 pt higher avg SAT tended to be ranked 5 to 8 percentile ranks lower in their class, other things being equal. The improvement in class rank among students who choose to attend a less selective college may partly explain why these students do not incur lower earnings. Employers and grad schools may value their higher class rank by enough to offset any other effect…

    p. 1512: A key assumption of our matched-applicants models is that the school students choose to attend from the set of colleges to which they were admitted is unrelated to… their unobserved abilities.

    p. 1515: Probably a more important issue is whether the school-average SAT is an adequate measure of school selectivity.

    p. 1518: In all the models we estimated… [there was] a higher payoff to attending a more selective college for children from lower income households.

    p. 1518: Although the avg SAT of the school a student attends does not have a robust effect on earnings once selection on unobservables is taken into account, we do find that the school a student attends is systematically related to his or her subsequent earnings.

    p. 1522: College tuition may have a significant effect on subsequent earnings bc schools w/ higher tuition provide their students with more, or higher quality, resources.

    p. 1522: Both measures of expenditures per pupil had a statistically significant and large impact on earnings in the basic model. [Two other models showed] smaller and less precise [results]. Although the effect of expenditures per pupil was statistically insignificant, the coefficient was positive in all but one of the models and implied substantial internal rates of return to school spending, similar in magnitude to those for tuition. These results provide mixed evidence on the effect of expenditures per student on students’ subsequent income….

    p. 1524: our results would still suggest that there is not a “one-size-fits-all” ranking of schools, in which students are always better off in terms of their expected future earnings by attending the most selective school that admits them. This sentiment was expressed clearly by Stephen R. Lewis, Jr., president of Carleton College, who responded to the US News & World Report college rankings by saying, “The question should not be, what are the best colleges? The real question should be, best for whom?”

  31. 31 Admiral Aug 5th, 2007 at 8:36 pm

    11. Do CEOs Set Their Own Pay? The Ones W/O Principles Do (1/2000)
    By: Bertrand & Mullainathan

    Since it is only infinitesimally relevant, I am only putting up the abstract. It’d be a great lesson for the kids though.

    ABSTRACT: We empirically examine two competing views of CEO pay. In the contracting view, pay is used to solve an agency problem: the compensation cmte optimally chooses pay contracts which give the CEO incentives to maximize shareholder wealth. In the skimming view, pay is the result of an agency problem: CEOs have managed to capture the pay process so that they set their own pay, constrained somewhat by the availability of cash or by a fear of drawing shareholders’ attention. To distinguish these views, we first examine how CEO pay responds to luck, observable shocks to performance beyond the CEO’s control. Using several measures of luck, such as changes in oil price for the oil industry, we find substantial pay for luck. Pay responds about as much to a “lucky” dollar as to a general dollar. Most importantly, we find that better governed firms pay their CEOs less for luck. Our second test examines how much CEOs are charged for the options they are granted. Since options never appear on balance sheets they might offer an appealing way to skim. Here again we find a crucial role for governance: CEOs in better governed firms are charged more for the options they are given. These results suggest that both views of CEO pay matter. In poorly governed firms, the skimming view fits better (pay for luck and little charge for options) while in well governed firms, the contracting view fits better (filtering out of luck and charging for options).

  32. 32 Admiral Aug 5th, 2007 at 9:18 pm

    12. Let’s go to court! Firing costs and dismissal conflicts. (8/2000)
    Galdon-Sanchez & Guell

    p. 3: In this paper we investigate the cost of firing by studying court outcomes of dismissal conflicts for several countries.

    p. 3: two types of patterns are found among the European countries: either the worker wins most of the cases, or the worker and the firm win half the times each. For the US, the unemployment insurance conflicts that end up in court are mostly won by the firm.

    p. 3-4: The gap between the severance pay for fair and unfair dismissals is a key factor in the determination of such outcomes. Those countries with a small gap have workers winning most, while countries with higher gap have 50% win rates.

    p. 4: This literature has also highlighted that the cases that end up in court are a non-random sample of the population.

    p. 7: Most American workers do not contribute to the Unemployment Insurance Find (UI), instead employers and fed gov’t do. In Europe, to the contrary, e’ee and e’er contrib. are generally collected. In this sense, and from the e’er’s perspective, American UI arel ike severance payments in Europe.

    p. 7: There are two types of req’ments in order to be eligible for UI: monetary and non-monetary. Monetary req’ments are related to the wage and tenure in the previous job. Non-monetary req’ments depend on separation and non-separation issues. The latter relate to the unemployed willingness to accept suitable work, being able and available for work, etc.

    p. 7: A worker is disqualified for UI if he voluntarily left the firm w/o good cause, was dismissed due to misconduct, or participated in a strike. [Good riddance.]

    p. 8: there are two clearly distinctive groups of countries: those in which the % of cases won by the worker is around 50%, that is UK and Italy; and those in which the worker wins in the majority of the cases, that is France and Spain.

    p. 8: our model will predict that the # of cases taken to court and the court outcomes will depend on the firing costs parameters of the economy.

    p. 11: the fact that effort is not observable and that the law leaves room for interpretation generates the following possibilities for lying: i) the firm claims a disciplinary case when it is a redundancy; ii) the worker denies a disciplinary case, claiming it is a redundancy.

    [And most of this ended up being hopelessly irrelevant. Whoops.]

  33. 33 Admiral Aug 5th, 2007 at 9:46 pm

    13. Economic Considerations and Class Size (09/2000)
    By: Krueger

    p. 1: Apart from the opportunity cost of students’ time, the number of teachers hired per student is the main determinant of the economic cost of education. … variability in TX of the pupil-teacher ratio accounts for 2/3 of the variability in expenditures per student. If reducing class size does not increase student achievement, then variations in overall spending on education are unlikely to matter either.

    p. 1: Hanushek says no strong/consistent relationship between school inputs and student performance.

    p. 2: Hanushek’s analysis applies equal weight to every estimate, and therefore assigns much more weight to some studies than others. … This problem arises bc Hanushek used a selection rule that would extract more estimates from studies that analyzed subsamples of a larger data set than from studies that used the full sample of the larger data set AND because considerable discretion was exercised in the application of the selection rule.

    p. 3: Even using Hanushek’s classification of the estimates… class size is systematically related to student performance

    p. 4: I would argue that TN’s Project STAR is the single Barbary steed in the class size literature. … Research on the experiment indicates that students who were randomly assigned to classes with about 15 students performed better than those who were assigned to classes with about 22 students, even by the end of HS.

    [Although not reproducing everything, I have to say, some of this is a devastating attack on Hanushek's methodology. Krueger's mostly lighting into Hanushek's 1986-98 work. Apparently the two duke it out in a 2002 EPI leaflet. Anyway, this is the abstract of a 1999 Hanushek piece:

    While random-assignment experiments have been considerable conceptual appeal, the validity and reliability of results depends crucially on a number of design and implementation issues. This paper reviews the major experiment in class size reduction – Tennessee’s Project STAR – and puts the results in the context of existing nonexperimental evidence about class size. The nonexperimental evidence uniformly indicates no consistent improvements in achievement with class size reductions. This evidence comes from very different sources and methodologies, making the consistence of results quite striking. The experimental evidence from the STAR experiment is typically cited as providing strong support of current policy proposals to reduce class size. Detailed review of the evidence, however, uncovers a number of important designs and implementation issues that suggest considerable uncertainty about the magnitude of any treatment effects. Moreover, there is reason to believe that the commonly cites results are biased upwards. Ignoring consideration of the uncertainties and possible biases in the experiment, the results show effects that are limited to very large (and expensive) reduction in kindergarten or possible first grade class sizes. No support for smaller reductions in class size i.e., reductions resulting in class sized greater than 13-17 students) or for reductions in larger grades is found in the STAR results.]

    p. 19: Lazear (1999) provides a model in which students who attend a smaller class learn more bc they experience fewer student disruptions during class time, on avg.

    p. 20: Another implication of Lazear’s model is that optimal class size is larger for groups of students who are well behaved…. Schools therefore have an incentive to assign weaker, more disruptive students to smaller classes. … If schools voluntarily assign weaker students to smaller classes or if compensatory funding schemes cause weaker students to have smaller classes, a spurious negative association between smaller classes and student achievement would be created. This phenomenon could explain why studies that focus on exogenous changes in class size … tend to find that smaller classes have a beneficial effect on student achievement.

    p. 21: the effect of school resources on achievement is most commonly measured in terms of student performance on standardized tests.

    p. 28: the cost-benefit calculations… suggest that the internal rate of return from a 7-student reduction in class size in grades K-3 is about 6%

    p. 29: The relationship between class size and achievement is not as robust as, for example, the relationship between yrs of education and earnings. But this is probably bc relatively small achievement gains from smaller classes translate into positive benefit-cost differentials.

  34. 34 Admiral Aug 6th, 2007 at 2:54 am

    14. School Reform in the 21st Century: A Look at the Effect of Class Size and School Vouchers on the Academic Achievement of Minority Students (01/2000)
    By: Rouse

    p. 3: the achievement gap in math and reading between Whites and African-Americans and Hispanics has narrowed over the past 25 yrs. However, a substantial gap remains.

    p. 4: Hanushek believes that the sizeable ethnic gap and low performance of all US students suggsts the educational system is in serious need of change, while Krueger notes that given the rising proportion of minority students who are immigrants or raised in poverty, the trend in their test scores may understate the overall contribution of the schools and argues that changes in NAEP scores are correlated with increases in school expenditures per student and decreases in pupil-teacher ratios. As a result, perhaps our edu system is not in “crisis,” and traditional reforms can make a difference.

    p. 6: students… initially placed in a small class scored about 3 percentile points more than students in the regular-sized classes (including those that had a teacher’s aid). In addition, each yr in a small class yielded an increase of another 0.65 percentile pts.

    p. 7: small classes were particularly beneficial for low-income and African-American students, and students attending inner-city schools.

    p. 7: it is unclear how test scores translate into factors that have more of a “proven track record” of mattering for success in later life; factors such as edu attainment and wages. Krueger and Whitmore… show that on avg students assigned to small classes were almost 4 percentage points more likely to sit for a college entrance exam and for African-Americans the increase was 8 percentage points.

    p. 8: it is also difficult and expensive to implement on a large scale as additional teachers must be hired and classrooms built. A good illustration of the potential difficulties in implementation is the experience in California. [Data follows.]

    p. 8: The avg expenditure per student in the US in 1997-98 was $6,624; therefore reducing class sizes by about 1/3 (the avg in the STAR experiment) would likely increase yearly costs by about $2,208. … the question remains whether this relatively expensive intervention is the most efficient use of public funds to improve education.

    p. 11: As in research on the effect of class size, in order to study whether vouchers would improve the achievement of these students once in the private schools and their achievement had they remainedi n their assigned public schools. And many would argue that the best control group is constructed using a randomized experiment in which one group of students is randomly allocated a voucher and a second group of students is randomly denied a voucher. This experiment is currently being conducted in NYC.

    p. 13: …students who were offered a voucher attended smaller schools than those who were denied a voucher. Similarly, those offered a voucher attended schools with significantly smaller class sizes than those denied vouchers.

    p. 13-14: [Statements to effect that public schools must educate a more heterogeneous population than do private schools and this is an argument used by opponents of vouchers who argue that one cannot easily judge the effectiveness of public schools relative to private schools since private schools can choose who to educate.]

    p. 14: it appears that in this program racial segregation would be reduced. Finally, the table shows that students who were offered vouchers reported attending schools with less fighting among students and less truancy, and that the parents were in closer contact with the teachers. Overall, it appears that students who were offered a voucher attended better quality schools along several dimensions.

    p. 14: The authors found small, statistically significant gains in math in grade 4 and reading in grade 5 among those selected to receive a voucher.

    p. 15: Voucher parents were more satisfied with their children’s schools.

    p. 15: these are results only from the first year of the program; over time the effects may become even stronger or may diminish.

  35. 35 Matt Aug 28th, 2007 at 10:30 pm

    Here is the thread from MR with comments on Christian’s inquiry.

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