Cash For School Performance in DC

I’m back in DC after spending the summer in California. To get ready for my return to DC/Baltimore I have been watching the fifth season of the Wire, I still have a few disks to go so don’t ruin the ending for me.

In the fifth season Baltimore mayor Tony Carcetti spends a lot of time worrying about Baltimore City schools test scores. One tool he never tried was paying students to do better on tests. This type of program has become popular recently in Latin America paying households cash on the condition that they attend school. On my recent trip to rural Oaxaca most families received government funds and now almost all children completely through 8th grade.

In the US the problems are slightly different. You can get the kids to go to school, but improving tests scores is harder. Last March I discussed how New York City is trying a program that pays students if they keep regular attendance, turn in homework, and pass state tests.

Now that program is coming to DC. Along with a randomized trial (students in 14 schools will receive money and will be compared with 14 similar schools in a control group that won’t) Also like NYC Ronald Fryer, Harvard Economist, will be doing the analysis.

I look forward to seeing the results.

Short and Long Run Responses to Price Changes

Last fall, South Dakota businessman Steve Polley was scouting for ways to make some extra income when he saw a news headline: The price of hops was surging because of a global shortage.

From a recent Wall Street journal article on hops (the stuff that makes beer bitter and tasty).

When the price of an agricultural good goes up and there are profits to be made by selling it, people like Steve Polley, will try to start producing more. However, if you plant hops it takes several years to produce any. So if the demand for hops goes up because people like to drink beers like 60 minute IPA or Hops Slam, the price of hops in the short run is likely to surge up.
But after a few years all those farmers who planted additional hops start seeing yields. The price of hops will start to fall back after a few years (the long run). Or as the article put it

Some hops experts are skeptical about the prospects of the new growers. Ralph Olson, owner of Hopunion CBS LLC, a broker of hops, predicts many nascent growers won't be in business in a few years. Prices will come down, and insects can wreak havoc, he warns. Hops "are tough," he says. "The economics aren't there."

Same story can be told about coffee or oil. It takes a few years to adjust to a change in prices.

Shameless Self Promotion: Work on Minor League Baseball

My Towson colleague, Tom Rhoads, and I recently wrote a paper on minor league baseball attendance. Looking at the impact of winning, homeruns, and major league prices.

Along with some great data from baseball-reference.com we also used information on the cost of going to a major league game from Team Marking Report. You might be familiar with their average cost of a family of 4 going to a major league baseball game each year.

Jon Greenberg, from Team Marketing Report, wrote up a nice profile of our work.

What are Economists Good For?

When I tell people I’m an economics professor, I usually get one of two reactions.

1.The econ class I took in college was really boring, hard, or yuck! (Occasionally it is positive)
2.What do you think is going to happen with the stock market, price of oil, or housing prices?

Scott Adams, the man behind Dilbert, offers up his view of what economists are good for.
“…if an economist tries to tell you where the stock market will be in a year, you can safely ignore that. But if he tells you a gas tax holiday is an unambiguously bad idea, that's worth listening to, especially if economists on both sides of the aisle agree.”

So ironically, we are asked most about what we cannot give a good answered for, but ignored when we can give a good one.

At least I don’t have to hear the same lawyer joke over and over again.

Also, I wonder what people ask proctologists.

h/t to Newmark’s door

One Child Policy, Sex Ratio and Crime in China

Over on Voxeu.org, Esther Duflo has a very readable piece on the potential rise in crime caused by gender selection as a result of China’s one child policy. As Duflo points out there are nearly 110 young males (age 15-25) for every 100 young women. As the only child generation has reached adulthood, crime rates have increased over 13%.

Duflo cites a recent study by Chinese and American researchers: “Sex ratio and crime: Evidence from China’s one-Child Policy” (by Edlund, Li, Yi, and Zhang). The study compares regions that had different rates of enforcement of the one-child policy, which led to differences in the male to female sex ratio. Overall, Duflo says that the increase explains about 1/7 (2% ish) of the increase.

I went to look at the paper and the abstract posted (here) says that crime had increased 5-6% from the change in sex ratio. Even though the downloadable working paper (here) is more in line with the 2-3% number Duflo cites?

A couple of questions arise though. What is the impact of 3-6% rise in the crime rate? Could this impact China’s economic growth prospects, particularly since the ratio is now 120 boys to 100 girls?

My solution to the problem. Bring more Chinese males to American Universities (see here). (OK that won't work either).

How about paying households who have girls in China?

h/t to Chris Blattman

Paying Me Not to Park Part II: Stanford Does It

Last week, I wrote about the possibility of Towson, my University, to pay me not to park. The idea being that the school subsidizes faculty and student parking, so if they could get me not to purchase a parking pass by paying me the school could save money (of course they could raise parking fees too).

I thought this suggestion was a little crazy, but it is just crazy enough for Stanford University! The program is detailed in Stanford’s alumni magazine here. Stanford offers faculty and students $216 a piece last year ($282 this year) not to purchase a parking pass. Plus those who join the program also get a chance at valuable prizes.

The results are impressive from the article “The percentage that drive to work alone has dropped from 72 percent in 2002 (before the program) to 52 percent in 2007.”

One problem might be that you want to drive to work occasionally, so Stanford allows the non-commuters to purchase day passes.

Another concern is that an emergency might occur (sick kid, house is on fire, or you forgot your lecture notes). Stanford has that covered with an emergency ride program. More specifics found here.


I have been spending the summer at Stanford, but not as official employee. I’m riding my bike to work and have not parked on campus all summer. Can I have my check now?

How to Increase Housing Prices? Import Buyers

One way to look at the current housing crisis is that we have built too many homes. Another way to look at it is we don’t have enough buyers. So how do we get more buyers, Alan Greenspan suggests increase quotas for skilled immigrants. Excerpted from a Wall Street Journal interview

"The most effective initiative, though politically difficult, would be a
major expansion in quotas for skilled immigrants," he (Greenspan) said. The only
sustainable way to increase demand for vacant houses is to spur the formation of
new households. Admitting more skilled immigrants, who tend to earn enough to
buy homes, would accomplish that while paying other dividends to the U.S.
economy.

He estimates the number of new households in the U.S. currently is
increasing at an annual rate of about 800,000, of whom about one third are
immigrants. "Perhaps 150,000 of those are loosely classified as skilled," he
said. "A double or tripling of this number would markedly accelerate the
absorption of unsold housing inventory for sale -- and hence help stabilize
prices."