Allen C. Kelley

The Status and Prospects of the Economics Major

The objects, methods of instruction, content, and accomplishments of the undergraduate major in economics at institutions of higher education within the United States are discussed. Recommendations are provided for teaching students to “think like economists.”

Saving dependency and development.

The widely-observed finding in the literature showing little or no relationship between population growth (and dependency) and saving requires modification based on panel and cross-section estimation of aggregate country data. While such a relationship is still weak in the hybrid Leff-type model, it is now found consistently over time and by stage of development in the Mason variable-growth life-cycle framework, where changes in demographic factors account for a notable part of saving.

Economic and Demographic Change: A Synthesis of Models, Findings, and Perspectives

Building upon recent Barro models that account for the impacts of various economic and political factors conditioning the pace of economic growth, we evaluate the merits of alternative specifications that expose the impacts of demographic change. For a sample of 89 countries, we arrive at the qualified judgment that rapid population growth exerted a fairly strong, adverse impact, on the pace of economic growth over the period 1960-1995. The positive impacts of density, size, and labor force entry were swamped by the costs of rearing children and maintaining an enlarged youth-dependency age structure.

The Student as a Utility Maximizer

Allen C. Kelley once again applies economic analysis to the educational process in this paper which presents a model “in which the student is viewed as a utility maximizer making choices at the margin between allocating his time among the course in question, all other courses, and leisure….” The model is supported by the results of a classroom experiment in which two alternative “production techniques” were employed. One consisted of the traditional classroom format, the other involved student use of sets of lecture notes. Among the variables included in the regression analysis are performance on the TUCE, ACT-SAT scores, high school standing, major field, sex, students college level (sophomore or upperclassman), and percentage of sections attended. Conclusions are drawn about the efficiency of the experimental approach.

Household Savings Behavior in the Developing Economies: The Indonesian Case

Econometric research on the determinants of household saving based on micro data drawn from the less developed countries has lagged far behind the pace set in advanced nations. It would appear that there has been limited hypothesis-testing in the LDCs beyond macro formulations of the consumption function. Furthermore, very little of the development literature attempts to isolate the impact of structural change on aggregate personal saving, since few studies provide meaningful disaggregation. This state of affairs seems paradoxical, given the currency of W. A. Lewiss remark that the central problem in development theory is to explain an increase in domestic saving from 4 or 5 percent of national income to 12 or 15 percent.1 The dearth of empirical evidence on household saving appears all the more peculiar, given the current emphasis which marginal savings rates enjoy in a flourishing crop of growth models. Most of these ignore the sectoral components of savings, with their divergent behavior, and concentrate instead on aggregate savings performance. Per capita income, which is introduced as the independent variable, is required (a) to capture virtually all of the distributional changes underlying the growth process, and (b) to capture changes in other variables which have a significant impact on savings behavior, whether of households, corporations, or governments. The recent, and highly aggregative, Chenery-Strout model is just one example ;2 most growth models make aggregate domestic savings a simple function of per capita income, either current or lagged.3 On the one hand, this approach may yield simple, well behaved models and reasonably useful short-run forecasts. On the other hand, it offers only limited insight into the development process and contributes little to the policymaker who seeks to understand the savings decision and how he might act upon it. Furthermore, household saving is usually left in the background, while the government and corporate sector receive attention as the major contributors to high marginal saving rates. This state of affairs, if we have described it fairly, certainly cannot be

What drives third world city growth? A dynamic general equilibrium approach

The reasons for the dramatic population growth that has occurred in the cities of the developing world since the 1950s are explored. The authors develop a Computable General Equilibrium Model using data from 40 developing countries and test it for the period 1960 to 1973-1974 in order to evaluate the importance of the various factors contributing to this urban growth. The model is also used to examine the impact of the OPEC-induced fuel scarcity and other changes that affected the slowdown in urban growth in the late 1970s and to predict that most third world urban transition will peak before the year 2000. The authors suggest that earlier studies exaggerated the effects of rural land scarcity foreign capital inflows and population growth on third world urbanization. They conclude that imbalances of productivity advance across sectors and terms of trade between primary products and manufacturers were more critical.

International Migration and Economic Growth: Australia, 1865–1935

The nature of migration into Australia in the nineteenth and twentieth centuries provides much valuable material relating to the mechanism of interregional population transfers during one of the most important periods of demographic redistribution in recorded history. Examining this countrys experience during the seventy years, 1865–1935, two problems are treated which not only contribute to the understanding of Australian growth but also provide insight into important aspects of American economic development.

Uses and Abuses of Course Evaluations as Measures of Educational Output

The use of student evaluations of courses and professors has been examined by Professor Kelley in an effort to learn more about the factors that appear to be associated with “good” or “poor” ratings. Using student evaluations of the Principles of Economics course at the University of Wisconsin in Madison, Kelly investigated two dependent variables: measures of course evaluation and measures of professor evaluation. Eleven independent variables were included in the analysis, and two different regression models were used. The results are tentative, of course, but the study reveals some interesting findings on the impact of teaching assistants, the students expectation of his course grade, and the professors propensity to be generous or niggardly in awarding high grades.

Demographic change and the size of the government sector

ILO pub-WEP pub. Working paper on the analytical linkages between demographic change and public expenditure, with particular reference to OECD countries - constitutes part of a WEP research project on population and employment. References.

Population Pressures, Saving, and Investment in the Third World: Some Puzzles

For over 25 years economists and population specialists have generally embraced the plausible notion that rapid rates of population growth exert a quantitatively significant adverse impact on the pace of economic growth through the effects of age dependency capital shallowing and investment diversion. However empirical research has not sustained these hypotheses individually or collectively. One general factor appears to account for this variance between theory and facts--the tendency to develop analyses with simplifying assumptions that are not then subjected to adequate empirical tests. At its most fundamental level economics is about making choices in the face of scarcity. In the literature relating population growth savings and investment and modeling of choices has been amazingly narrow--indeed almost a-economic. At the household level population pressures are usually modeled by engineering-like fixed-coefficient formulae. In contrast trade-offs between quantities or qualities of consumption are seldom admitted parents work force behavior is usually taken to be uninfluenced by family size and children are typically assumed to contribute nothing productively. Similarly at the government level population pressures are modeled to show population-sensitive expenditures taking priority and crowding out more productive spending. In reality governments respond with more flexibility than the models suggest and some of the population-sensitive expenditures may be growth-enhancing. More elaborate analyses reveal 2nd-order effects: economizing on scarce resources and an expansion in supply.