Nicholas G. Rupp

Retracting a Gift: How Does Employee Effort Respond to Wage Reductions?

Since the days of Henry Ford, employers have argued that higher pay induces employees to provide additional effort. While the converse is also thought to be true, there is little empirical evidence testing this hypothesis. Not only are significant company‐wide pay cuts rarely observed in practice but measures of employee effort are typically difficult to quantify. This article examines the effort responses of U.S. commercial airline pilots following a recent series of large, permanent pay cuts. Using airline on‐time performance as proxy for unobservable pilot effort, we find only limited support for the hypothesis that pay cuts lower employee effort.

An Investigation into the Determinants of Flight Cancellations

This paper uses Bureau of Transportation data on 35 million US domestic flights between 1995 and 2001 to investigate the determinants of flight cancellations. The paper is novel in two regards, it focuses exclusively on flight cancellations, and it explores the service quality–flight revenue relationship. We find that carriers have some control over the occurrence of flight cancellations given that cancellations are significantly less likely on Thursdays, Fridays and Sundays and for the last flight of the day. There is some evidence linking cancellations with revenue.

Who Initiates Recalls and Who Cares? Evidence from the Automobile Industry

In this paper, we investigate two questions. First, we explore which entity (the NHTSA or the manufacturer) is more likely to initiate a given auto safety recall campaign. Second, we analyze the determinants of owner response rates to safety recalls. Our data spans nineteen years (1980-98) for the six largest auto manufacturers. We find evidence that the government initiates larger, less hazardous recalls involving older models and financially weak firms. Inexpensive recalls are more likely to be manufacturer initiated. The largest owner repair responses are associated with newsworthy hazardous defects of new domestic vehicles in their inaugural model year. Copyright 2002 by Blackwell Publishing Ltd

Airline Schedule Recovery after Airport Closures: Empirical Evidence since September 11

Since the September 11, 2001, terrorist attacks, repeated airport closures due to security breaches have imposed substantial costs on travelers, airlines, and government agencies in terms of flight delays and cancellations. Using data from the year following September 11, this study examines how airlines recover flight schedules upon reopening of airports that have been closed for security reasons. As such, this is the first study to empirically examine service quality during irregular airport operations. Our results indicate that economic considerations, particularly the potential revenue per flight, have predictable effects on service quality following airport closures. Airport concentration, hub destination, and various logistical factors also significantly influence flight outcomes.

The Role of Homework in Student Learning Outcomes: Evidence from a Field Experiment

This paper describes a field experiment in the classroom where principles of microeconomics students are randomly assigned into homework-required and not-required groups. We find that homework plays an important role in student learning, especially so for students who initially perform poorly in the course. Students in the homework-required group have higher retention rates, higher test scores (5% to 6%), more good grades (B’s) and lower failure rates. We also study the relationship between endogenous homework submission and test performance using instrumental variable estimation. We find that homework submission has a large positive effect on test performance.

A Guide to Booking Airline Tickets Online

In this study, we document and analyze price-offer curves (the dynamics of offered prices as the departure date approaches) for 105 specific round trip itineraries on 50 busy US routes. The data were collected from the three leading on-line travel agents’ web-sites. We exploit across-route variation in the level of competition and presence of low-cost carriers (LCC), in particular Southwest Airlines (a carrier that does not sell its tickets through on-line travel agents). Both fares and yields are consistently higher along the entire price-offer curve on less competitive markets, and on routes without LCC presence. Price changes are smoother on competitive routes than on markets with one or two competitors. Price drops are observed across a spectrum of the markets, and at any day prior to departure. In particular, at least one price drop was observed within ten days before the flight for about half of all the round trips we tracked. In about one-third of round trip itineraries, we observed price drops in the last week prior to departure. At the same time, the shape of the average price-offer curve is as expected – flat up to about three weeks before the flight, and rising rapidly afterwards. We do not document systematic differences across on-line travel agents; however, differences in price quotes are not infrequent. Simple cost-benefit analysis shows that when booking a ticket closer to the planned departure date; a traveler should comparison-shop.

Does School Choice Increase School Quality? Evidence from North Carolina Charter Schools

Federal “No Child Left Behind” legislation, which enables students of low-performing schools to exercise public school choice, exemplifies a widespread belief that competing for students will spur public schools to higher achievement. We investigate how the introduction of school choice in North Carolina, via a dramatic increase in the number of charter schools, affects student performance on statewide end-of-year testing at traditional public schools. We find test score gains from competition that are robust to a variety of specifications. Charter school competition causes an approximately one percent increase in the score, which constitutes about one quarter of the average yearly growth.

An Analysis of Dynamic Price Discrimination in Airlines

Prices for the same flight change substantially depending on the time of purchase. Labeling this time-variation as discriminatory is misleading because the cost of an unsold airline seat changes with inventory, days before departure and aggregate demand expectations. This paper uses a unique dataset with round-the-clock posted fares to identify a dynamic price discrimination component. Consistent with agents forming expectations of future prices, we find higher prices during office hours (when business travelers are likely to buy tickets) and lower prices in the evening (when leisure travelers are more likely to purchase). As the proportion of business travelers increases closer to departure, both price dispersion and price discrimination become larger. We also find that price discrimination is more pronounced for low cost carriers than for legacy carriers.

Mergers and Product Quality: A Silver Lining from De-Hubbing in the U.S. Airline Industry

This paper investigates how de-hubbing, which occurs when an airline ceases hub operations, impacts product quality. Examining five cases of de-hubbing following U.S. airline mergers between 1998 and 2015, we analyze how three measures of product quality change following de-hubbing: on-time performance, travel time, and flight cancellations. While state attorney generals have opposed recent airline mergers due to concerns about potential job losses and a reduction in airport service following airport de-hubbing, we find a silver lining from mergers as airlines offer improved product quality at de-hubbed airports due to more reliable flight schedules and shorter travel times.

Teaching economics with a bag of chocolate: A classroom experiment for elementary school students☆

This paper describes a classroom experiment suitable for elementary school students in which participants are actively engaged in making trading decisions. Students are provided an endowment of gum and are asked to make trading decisions to acquire chocolate. As the opportunity cost of acquiring a piece of chocolate rises, fewer students are willing to make trades. This interactive classroom exercise illustrates three fundamental economic concepts: the law of demand, opportunity costs, and gains from trade. Assessment test results reveal that two days after this classroom exercise, fifth grade students register significant improvements in their understanding of three fundamental economic concepts.