Lee C. Spector

Probit Analysis and Economic Education.

Spector and Mazzeo assert that ordinary least squares regression analysis has been misused by many economics education researchers. They explain that OLS is inappropriate for the analysis of discrete dependent variables, and they suggest the use of probit analysis instead. They then show how probit analysis can be employed in an economics education research project and compare the results of this approach with the results obtained by using OLS. (Those who want to know more about probit analysis might be interested in a new book, Carlos Daganzos Multinomial Probit: The Theory and Its Application to Demand Forecasting, published in 1979 by Academic Press, Inc. Also see the bibliography provided by Spector and Mazzeo.)

Test Scrambling and Student Performance.

During the past several years, as budgets have become tighter, many colleges have increased the size of the typical principles of economics class. Lecture classes of more than one hundred students have become common, and many instructors who formerly used essay exams have switched to more easily graded multiple-choice exams. Such a change troubles many faculty members because of the increased potential for cheating. One method of counteracting this potential is to use multiple forms of the same exam. Typically, a professor creates one form of the exam and then asks a secretary to create another form by rearranging the questions. This procedure produces one content-ordered exam that matches the order in which the material was presented in class and one exam that has a scrambled order. Students may perform better on a content-ordered exam because they have less test anxiety. They may also glean information about one question from previous questions and might concentrate better if they do not have to jump from one topic to another. For these reasons, some professors question whether the ordered exam and the scrambled exam are actually the same exam. If different exam formats produce different student performances, grading all students on the same curve might be inappropriate.

Joint Product Signals of Quality

SummaryThe relationship between product quality, signals, and the firms optimal pricing policy has been given much attention in economics. The literature is extended in this paper by considering the signaling problem of a firm that jointly produces two commodities—one of known quality to consumers (a search good) and one of unknown quality (an experience good).The model presented employs a stylized reputation function, a linear cost structure, and linear demand schedules to produce two interesting insights. First, the search goods price can potentially be used as a signal of the quality of the experience good. Second, the price of a search good will depend upon whether it is jointly produced with another search good or an experience good or whether it is produced in isolation by a single product firm. Furthermore, evidence from a paper on gasoline pricing seems to support this contention.

Tournament Performance and ‘Agency’ Problems: An Empirical Investigation of ‘March Madness’

Tournaments have long been used as a resource allocation device. Regardless of the margin of victory, a tournament’s champion is typically rewarded far more handsomely than are its losers. For this reason, a tournament can generally be expected to elicit spectacular levels of performance from a group of competitors; performances in professional golf tournaments are an example. Surprisingly, the analysis in this paper indicates the existence of no significant relationship between the rewards and performances of participants in the NCAA basketball tournament. To explain this finding we allude to the classic principal-agent problem.

Mom-and-Pops or Big Box Stores

This article explores WalMart’s impact on the retail sector in the counties in which it is located, as well as in surrounding counties, by examining the number and size of retail outlets, by retail category. Using statewide data as well as a case study incorporating econometric modes, we find that the main impact of the entrance of a WalMart primarily falls on competitive big box stores. Furthermore, we find that the long-run adjustment to the entrance of a WalMart takes between 18 and 36 months.

Plus/minus grading and motivation: an empirical study of student choice and performance

This paper considers whether student motivation might be impacted by the replacement of a straight (A, B, C, D, F) grading system with a plus/minus system (A, A−, B+ … D−, F). The data that are examined are from several undergraduate economics classes at a mid‐sized midwestern university in the United States. The data includes student characteristics, student performance and students’ choices of either a plus/minus or a straight grading system. In this admittedly small‐scale study students, who chose plus/minus grading, were not significantly more motivated than students who opted for straight grading.

Female participation and the natural rate of unemployment: A reexamination

Abstract According to most estimates, there has been a rising trend in the natural rate of unemployment. Economists often attribute this trend to demographic changes in the labor force, including the increased participation rate of women. This paper reevaluates this hypothesis with respect to gender within the context of a macroeconomic model, which also controls for the size of the labor force. It is found that this compositional effect is an illusion caused by not controlling for the negative impact of labor force size. Instead, women are found to have higher unemployment rates because they make up the bulk of the latest entrants into the labor force.

The Impact of Diabetes Mandates on Infant Health

Among the factors suspected for the lagging improvements in infant health in recent period are increasing obesity and diabetes prevalence among women of childbearing age. This paper investigates the impact of mandated insurance coverage for diabetes on adverse pregnancy outcomes. Among infants born to educated women, who have high rates of coverage through private insurance affected by mandates, diabetes mandates are associated with a reduction in premature births and a decrease in low birth weight prevalence. These gains are concentrated among older women and are larger for African-Americans. There is a weaker effect on the prevalence of high birth weight (>4000 grams), potentially due to the deleterious effects of an increased probability of weight gain in excess of 35 pounds among diabetic women in mandates states.

The impact of diabetes insurance mandates on infant health

Among the factors thought to contribute to lagging improvements in infant health in recent years are increasing obesity and diabetes prevalence among women of childbearing age. This article uses a difference-in-difference-in-difference empirical strategy to investigate the impact of mandated insurance coverage for diabetes on adverse pregnancy outcomes. Among educated women, who have high rates of coverage through private insurance that is subject to insurance mandates, diabetes mandates are associated with a reduction in low birth weight and premature birth prevalence. These gains are concentrated among older women and are larger for African-Americans. There is a weaker effect on the prevalence of high birth weight, potentially because of the deleterious effects of an increased probability of pregnancy weight gain in excess of 35 pounds among diabetic women in states with mandates.

Employment determination in macroeconomic models: Some empirical evidence☆

Abstract The specification of how employment is determined has important implications for short-run macroeconomic policy prescriptions. Heretofore, there have been two main methods for testing this specification: comparing an equilibrium model to a disequilibrium model and using a switching regression model. This paper introduces a new method which is based on the distribution of the error term and the sign and significance of the real wage coefficient in a reduced form equation for employment. It is found that for the years 1948–1984 inclusive, the United States labor market has been operating under a fixed wage regime in which employment is being determined by the short-side of the market. Furthermore, the tests also indicate that the real wage is as likely to be below the equilibrium real wage as it is to be above it. As such, one cannot even make the case that, even though employment is determined by the short-side of the market, it “acts as if” it was demand determined.