Bad Ideas for Budget Problems at Universities

This weekend Scott Adams (creator of Dilbert) in the Wall Street Journal proposed several what he called bad ideas to get wealthy people to support higher taxes on higher income brackets. He proposed bad ideas, because bad ideas can spur good ones (read his example about monkey helicopter pilots). So his bad ideas for higher taxes the rich get, free use of the carpool lane, to cut in line at the DMV, a thank you letter from welfare recipients, and to vote twice in any election. Again problems with all of these ideas, but perhaps from the bad can come good.

So in the spirit of bad ideas, I propose a few to help university budget situations. Schools like mine, Towson, are generally getting less funding from the state and haven't been able to raise tuition due to legislative mandate.

So again I necessarily don't support any of these ideas, they are merely to help develop good ideas. We could think of these individually or package them for any student who pays double tuition. I'm aware that universities already charge students different prices, but these are crazier (worse) ideas


Bad Ideas For Students:
1. Like the carpool lane idea, I propose we sell faculty parking passes to students, but at 3 times the cost that faculty to pay. At Towson, students often spend 15-30 minutes looking for parking, so even a $2,000 parking pass may look enticing to some.
2. A faculty member at another school told me that someone proposed he participate in an auction, where a faculty member would change one grade on the student record. The faculty member refused to participate, so bad idea. A less bad, but still bad idea might be to let students skip one required class.
3. If some students could save a semester by getting into the right classes, they may be willing to pay more to register early.
4. The alumni office declares an amount of donation it would like from the student body (say $100,000 or $5 a student) if it reaches that goal one day of class is canceled.
5. Have students in majors or colleges with higher demand (like the business) pay more (although this has been proposed at other places)


Bad Ideas for Faculty
1. Ditto for more money better parking.
2. How about a faculty member can pay a fee to have a student dropped from their class (bad idea)
3. In each department an auction is held the winning faculty member gets their choice of schedule.
4. If the faculty donate more (or 2x as much) than the class day is not canceled.


College President
1. Listen to any of the above advice

So what are your bad ideas?

State of the Union, It isn't all competition with China

Quick thought on the State of the Union. I don't like setting up the US as in competition with China or India. In some cases this is true, we compete for jobs when a factory choses between China and Cleveland. But, one of Obama's goals is to raise our exports, one of the ways this is most likely to happen is if China and India continue to grow. As the Chinese and Indians grow richer they purchase more goods from the US.

Perhaps this is best demonstrated by the recent announcement that GM sells more cars in China than the US.

It is also worth reading this post from (Kids Prefer Cheese) reminding us that 20 years ago, it was the Japanese who were going to overtake the US.

Regression to the Mean and Tackling Health Care Cost

Atul Gawande has a great piece in a recent New Yorker [the abstract is here]. It talks about programs aimed at reducing costs for the patients that have the highest medical expenses. Megan McArdle has a great discussion of the piece on her blog.

The thing that struck me the most is the big reduction in cost some programs that offered support services to patients whose medical expenses reached millions of dollar a year were able to achieve. I wasn't the reading the article with my economics thinking hat on, so I hadn't thought about a control group. As Atul pointed out and my econ thinking cap came on even without a program we would likely expect that some expensive patients would have better years the next year (not get hit by a car or fall down) that is they would move back toward the mean medical expenses for an average person. So even without a program their expenses might fall. It highlights the importance of having a non-treated comparison group.

Related an economist friend said the best way to show regression to the mean is to took look at batting averages for baseball players up until the All Star Break and then their final average.

Silver Spring Econ: Whole Foods No Self Checkout and Cheaper Coffee

A couple of thoughts on the Whole Foods located just blocks from my house in downtown Silver Spring. In my area along with Whole Foods we also have a Safeway and Giant grocery store, which unlike Whole Foods have self check outs. I love this since I'm Safeway about 3 times a week. The Safeway self checkout seems to work better (although I don't go to Giant much), because there is 1 line for the 4 self check out kiosks, while at Giant there is one line for each kiosks, except for one line that is for the two under 10 item kiosk. Whole Foods, does not have a self checkout though in Silver Spring, but it does in other places.

So I why might Whole foods not have self check out, first Whole Foods shoppers buy a lot more non bar-coded items so ringing up your own groceries is harder. Second, Whole foods items on average cost more, so miss scanning items cost more.


Another thing surprised me about my trip to Whole Foods this weekend. They have one of the cheaper cups of coffee around town (I think $1.30) for a similar small at Starbucks it's $1.50 and $1.55 at Panera. I think Borders is even more. You could argue quality, but I don't think there is much difference. So perhaps cheap coffee (is a loss leader) or coffee gets you to buy more (I'm on to you Trader Joes with your small cup of coffee).

I'm now off to Carribou Coffe, which has $1 medium coffees on Mondays (which makes it more cheaper than the small), could it be they are trying to get me hooked, normally deals are found when demand is lower (lunch specials, matinées), but I'm guessing Monday is not the low point for coffee demand.

I wish I was going to Highland Origin, but they temporarily closed my favorite coffee shop so they could add an Ethopian restaurant to it, words you don't hear many places in the country.

How to Help the Orioles and Nationals

Henrik Kleven, Camille Landais and Emmanuel Saez looked at movements and performance of top soccer players in 14 countries over decades, tracking successive tax regimes and salary. Tax rates, they found, matter to players, motivating them to shift locales and affecting the record of their teams.

(Bloomberg) discussing this recent paper

According to Business Week my two local baseball teams the Baltimore Orioles and Washington Nationals have the 11 and 15th highest income taxes for major league cities with only NYC and SF being higher for MLB cities.

In short to give the same income to a player as Seattle, Texas or Houston the Nationals and O's must offer almost 9% more to offset income taxes.

So if Spain can give David Beckman a 50% tax break, I figure as a baseball fan why not give the O's and Nationals one too for free agent signings.

As an economist though, I'm skeptical it's a good idea.

h/t to Pete for passing on the article

Microcredit crisis? Part II

"Microcredit had this magical glow to it," Roodman said. "It's gone away, and that's healthy. But you wouldn’t say that just because of the mortgage crisis, we shouldn’t have mortgages."
David Roodman while being interviewed by Planet Money

The above quote is in response to a recent piece by Mohhamed Yunus in the NY Times about how microcredit was running into problems because private organizations had begun to lend money with the idea of making a profit. I have blogged recently about the microcredit crisis, where default rates on microcredit have sky rocketed in India.

Both Roodman and Yunus know far more than I do about microcredit, but I tend to side with Roodman that what works for Yunus in Bangladesh might not work in other places. As Roodman points out in this excellent longer post on his blog without international capital looking for some profit many wouldn't receive microcredit. Particularly in Latin America and Africa where population density is lower, so reaching borrowers is more costly and interest rates need to increase.

I would also suggest for further interest in the topic this piece in the New Yorker and this Planet Money broadcast

Economist in Love (me!) Welcome Spousonomics Readers

If you regularly read the blog of diminishing returns head over to Spousonomics for my Q&A about a very special economist in love. Spousonomics is a new blog to promote a book about the economics of being in a couple.

I had a blast answering the questions, and I scored bonus points with my wife Marie so I call it a win-win.

I'm looking forward to purchasing a copy of the book when it comes out on February 8th (can you guess what Marie is getting for Valentines day?). Also I'll blog a review shortly after.


If you are a Spousonomics Reader, welcome to my blog. Check out a few posts and let me know if you have questions or topics you would like to hear about.