Gender and Competition

Why do wages or occupations differ for men and women? There are several explanations for gender-specific differences, however, we do not have a convincing explanation yet. One possible explanation is that--for whatever reason--men are more likely to take risks than women. The analysis of differences in risk-taking has a strong experimental background, both in the laboratory and in the field. Eckel and Grossman (2008) and Croson and Gneezy (2009) provide surveys on experiments which investigate differences between the genders in their risk taking.

In a new working paper, "Evidence from Jumping Competitions", Mario Lackner and I analyze if female athletes differ from male athletes in their competitive behavior, using data from high jump and pole vault competitions. In these sports, we observe athletes choosing a risky strategy, namely the pass of a height. This is a risky strategy as the next jump is without doubt more difficult (the bar is raised). (Sport events are excellent "real-life" laboratories as they allow the analysis of behavior under clear rules, that is extremely difficult to observe in most other situations.)

While the rules for men and women are the same, we find striking differences in how often men and women use passes.



The returns to risk-taking are positive, which indicates underconfidence rather than overconfidence, for both men and women. Overconfident athletes would pass too often, reducing the probability to clear a height. The positive returns to taking risks, however, are much greater for women than for men, indicating that women are considerably less confident than men and could improve their outcomes by choosing to pass more often.

Patents

The current issue of the Journal of Economic Perspective has four papers on patents---and launches a "Case against Patents".

Michele Boldrin and David K. Levine, in the introductory paper:

The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity ... Our preferred policy solution is to abolish patents entirely ...

I suppose this is the start of a heated debate, I'm looking forward to the discussion. In the meantime, do read the excellent esseay on the historical perspective on patents by Petra Moser in the same issue. (Did you know that the Netherlands abolished its patent system in 1869 because patents were seen as a form of protectionism and rejected as a restriction on trade?)

The RAND Health Insurance Experiment

The RAND Health Experiment, carried out between 1974 and 1981, randomly assigned more than 2,000 families to different health insurance plans. These plans differed between free care and almost no co-payment. The project pioneered the way for field experiments in economics and Aviva Aron-Dine, Liran Einav, and Amy Finkelstein present a detailed summary and re-examination of the findings in a new NBER working paper, "The RAND Health Insurance Experiment, Three Decades Later":

This landmark and pioneering study was uniquely ambitious, remarkably sophisticated for its time, and entrepreneurial in the design and implementation of the then-new science of randomized experiments in the social sciences.

The importance of the findings from this large field-experiment cannot be overstated:

one of the central contributions of the RAND experiment is robust: the rejection of the null hypothesis that health spending does not respond to the out-of-pocket price

In other words, people react to costs, even when they consider their own health. (Remember, this was an almost revolutionary finding some 30 years ago!)

To quote the working paper once more, "it seems useful to remind a younger generation of economics of the details, and limitations, of the original work." Do read this.

Corrupt politicians

Yesterday, an Austrian court sentenced former Minister of Interior and MEP Ernst Strasser to four years in jail after being convicted of bribe-taking.

Recent economic research shows that corrupt politicians decrease overall welfare. In an analysis of 460 estimates of corruption on economic growth, Campos, Dimova, and Saleh find "negative and significant effects of corruption on growth [...] which seem to be stronger in academic than in nonacademic studies." (p15)

These effects may hit the poorest in society stronger. Using Indian data, Matthieu Chemin estimates that the election of a convicted criminal leads to an about 19 percent drop in consumption of the poorest in that area. (An older, ungated version is here.) Criminal politicians are perhaps more common in India than in Austria, Chemin quotes the Election Commission of India which states that 1,500 of nearly 14,000 candidates in the 1996 parliamentary election had criminal records.

Feldexperimente

Wir brauchen mehr Feldexperimente.

Early tracking--not good.

Austria's conservative party has a new spokesperson for education, Christine Marek. In one of her first interviews, she reiterates the Conservative's view that early tracking (the separation of 10 year olds into an "academic" and "non-academic" school track) is good and that comprehensive education until a later age ("late tracking") is bad.

Here's some evidence: Hanushek and Woessmann compare countries and identify tracking effects by comparing differences in outcomes:

The results suggest that early tracking increases educational inequality. While less clear, there is also a tendency for early tracking to reduce mean performance.

This is, by far, not one single study that shows that early tracking reinforces the impact of family background. Just one further example, Giorgio Brunello and Daniele Checchi :

early tracking reinforces the family background effects on the years of completed education, on the probability of dropping out and of enrolling or graduating in college. Therefore, in countries with less pronounced tracking, the difference in the dropout rate and college enrolment or completion between the children of poorly and better educated parents is smaller than in countries with stronger tracking.

Joint custody, marriages, divorces and the rest

Together with Marco Francesconi and Martin Halla, we examine joint custody and consequences for marriage, divorce, fertility, and female employment. We use registry data for the entire Austrian population and also divorce records from courts to analyze post-divorce outcomes. The results suggest that the availability of joint custody for divorcing parents---introduced in 2001---lowered divorce rates, increased marriage and marital birth rates, and lead to higher money transfers after divorce.

Joint custody provided men with more incentives to invest in marriage specific capital, which lead to more, and more stable, marriages. It also seems to have resulted in more specialization as female employment rates declined after the introduction of joint custody.