We need more experiments

The assistence job seekers receive from Unemployment Offices to find jobs is perhaps not as good as we might hope. A Study by Bruno Crépon, Esther Duflo, Marc Gurgand, Roland Rathelot, and Philippe Zamora (QJE; working paper version here) assesses youth unemployment policy in France using a controlled experiment:

"Job counselling" – a key French policy that prepares some job seekers for the recruitment process, and connects them with potential employers – seems to only marginally improve graduate’s chances of employment. Moreover, the evidence suggests that what’s good for one graduate may be bad for another: the beneficiaries of intensive job counselling are more likely to find employment simply at the expense of other job seekers. (Job placement and displacement.)

We need more experiments.

Weights in Regressions

Solon et al. have a new paper on the use of weights in empirical analysis. Not only does the paper have a great title, but it addresses one of the more hairy issues in empirical work, when and how to use weights:

We discuss three distinct potential motives for weighting when estimating causal effects: (1) to achieve precise estimates by correcting for heteroskedasticity, (2) to achieve consistent estimates by correcting for endogenous sampling, and (3) to identify average partial effects in the presence of unmodeled heterogeneity of effects. In each case, we find that the motive sometimes does not apply in situations where practitioners often assume it does.

There is, of course, no foolproof recipe:

In situations in which you might be inclined to weight, it often is useful to report both weighted and unweighted estimates and to discuss what the contrast implies for the interpretation of the results. And, in many of the situations we have discussed, it is advisable to use robust standard error estimates.

politikberatung durch ökonomInnen--Caveat emptor!

Haucap und Mödl, "Zum Verhältnis von Spitzenforschung und Politikberatung":

"Ökonomen agieren mit ihrer Forschung also im Wesentlichen auf zwei Märkten: Zum einen auf dem Markt für wissenschaftliche Publikationen im engeren Sinne, also den Fachzeitschriften, und zum anderen auf dem Markt für wirtschaftspolitische Beratung."

Sie zeigen:
* "nur jeder fünfte Artikel eines Ökonomen, der an einer Institution in Deutschland, Österreich oder der Schweiz forscht, [hat] einen besonderen Bezug zu spezifischen Problemen der Wirtschaftspolitik oder Ökonomie im deutschsprachigen Raum"

* "es [sind] primär nicht die forschungsstärksten Ökonomen ..., die sich in der Politikberatung engagieren"

Copyrighted Music

New research by Joel Waldfogel shows that the erosion of copyright does not necessarily lead to worse products. The study "Copyright Protection, Technological Change, and the Quality of New Products: Evidence from Recorded Music since Napster", published in the Journal of Law and Economics (working paper version), assesses the quality of recorded music since Napster.

Three different approaches are used (critics’ lists, music sales, and airplay data), assuming that if the music is better, it should be sold or played more often. Contrary to my own view, there is no evidence that the music released since Napster was of lesser quality. Copyright protection should therefore be weighted against producer surplus and consumer surplus.

boys and girls in the classroom

New evidence from Italy has strong implications for mixed high-school education. (See also this.) Anelli and Peri find that girls in single sex classes are more likely to study "hard" subjects (e.g., economics or engineering) at University than those in mixed-sex classes.

The policy conclusion are clear:

If an objective of schooling is to increase women’s career opportunities and thereby their salaries, our results would suggest that gender-separated classrooms would be an effective step in the right direction. Gender-separated classrooms would increase the probability of choosing high-earning majors for both women and men.

Similar evidence, for university students, have been obtained by Booth and Nolan: "after eight weeks in a single-sex environment, women were significantly more likely to choose the [risky] lottery".

While the Italian evidence is from a "natural experiment", the evidence by Booth and Nolan is from an actual field-experiment, following an earlier study in high-schools. Good schools should offer students the possibility of choosing single-sex classes or offer the possibility of a random lottery over single-sex or co-ed classes. (Which provides additional data for analyses of peer-effects and subsequent outcomes.)

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?)