This survey indicates a lack of rational expectations in the labor market for new grads. The results themselves are interesting. But one wonders why they are so strong. What gives?
Tuesday, January 20, 2015
Monday, January 5, 2015
A Discussion Group - Follow Up
There were enough takers that this will happen. Our first meeting time is the Thursday (1/8) at 10 AM in BIF. This is NOT the regular meeting time. That has yet to be determined. It is a time that works because classes are not in session.
If you are interested in joining us, please do. In that case, I would appreciate it if you would let me know ahead of time, either by a comment to this post or by emailing me.
Thanks.
If you are interested in joining us, please do. In that case, I would appreciate it if you would let me know ahead of time, either by a comment to this post or by emailing me.
Thanks.
Wednesday, December 17, 2014
Something for Next Semester - A Discussion Group*
If there is interest I would like to start a weekly discussion group in the spring on the general theme of taking the long view on your learning - things members of the group might try to have a greater take away from both the academic side and the intellectual part of the recreational side of undergraduate life. It would also be a place for group members to drive the discussion, talk about issues they are having and have the group weigh in on how to think it through. In some sense it is meant as a face to face alternative to the blogging you have done this semester.
We know each other a bit now from our class so we shouldn't need to spend much time breaking the ice. The group would be a bit of an experiment on whether outside of a course setting coaching qua thinking "it" through (whatever it is) can be effective for participants. I've not done a discussion group with students like this before. I tried this last year, but didn't get any takers. Truthfully, this probably would be more useful for juniors (or sophomores) than for seniors. The seniors are too close to getting out of here to benefit from this sort of thing. Of course, if you are a senior and you're interested, I certainly wouldn't stop you.
In my ideal we'd block off an hour once a week. Size-wise I'd hope for 4 or 5 students. That's about the max where if everyone shows each can participate vigorously in the conversation. Less would be okay but make the group more vulnerable to no shows. If more are interested I'd want to accommodate that, but it would move the group closer to a classroom setting and then the participation issue would creep in.
If you are interested you can indicate that via a comment to this post. That might encourage others to do likewise. Alternatively, if you'd rather be the follower than the leader, you can send me an email to indicate your interest.
Thanks for your attention.
We know each other a bit now from our class so we shouldn't need to spend much time breaking the ice. The group would be a bit of an experiment on whether outside of a course setting coaching qua thinking "it" through (whatever it is) can be effective for participants. I've not done a discussion group with students like this before. I tried this last year, but didn't get any takers. Truthfully, this probably would be more useful for juniors (or sophomores) than for seniors. The seniors are too close to getting out of here to benefit from this sort of thing. Of course, if you are a senior and you're interested, I certainly wouldn't stop you.
In my ideal we'd block off an hour once a week. Size-wise I'd hope for 4 or 5 students. That's about the max where if everyone shows each can participate vigorously in the conversation. Less would be okay but make the group more vulnerable to no shows. If more are interested I'd want to accommodate that, but it would move the group closer to a classroom setting and then the participation issue would creep in.
If you are interested you can indicate that via a comment to this post. That might encourage others to do likewise. Alternatively, if you'd rather be the follower than the leader, you can send me an email to indicate your interest.
Thanks for your attention.
Final Exam Results
The exams are now graded. It may take still an hour or more for me to post the grades. I want to do that with some care and make sure there aren't clerical errors. What follows are some comments about the exam itself.
Question 1 was the essay question on the first midterm. So you had seen it before. Question 3 was on the final from last year and we reviewed it on the last day of class. Question 2 was new for you. It was there, in part, to see what you would do with it. The means on questions 1 and 3 were right about at 81 (out of 100). The mean on question 2, was just below 70. I will talk about question 2 below.
One of the things I found interesting is that the vast majority of students accepted the premise of the question without requiring further definition. Let's consider possible ways to further define the issues. I'll begin with this rather famous quote from Thomas Edison.
So one issue is that invention takes time and one might be "in process" for quite a while. How does the time component get managed? Do we look for success after a fixed time window or let the process play out? Nobody talked about that.
Another issue is whether the invention is fundamentally new for the entire industry or if instead it is something that has been tried elsewhere but is new for this particular organization. In the literature on diffusion of innovation, there typically is a difference made between an innovator, on the one hand, and an early adopter, on the other. Each engage in risks but of a different sort.
Then there might be an issue of whether the innovations themselves could be larger or smaller and hence if the reward or punishment varied, either absolutely or relatively, as a consequence. People didn't take on that issue much at all.
I'll do one more of these and stop, but know that this list could be expanded without too much difficulty. There is the question of how innovation translates into productivity and profitability for the firm. There is a notion called leverage, which in this context means small changes that have big positive impact. There is a recent book by Atul Gawande called The Checklist Manifesto, where he argues that implementing checklists for procedures that have some complexity to them (his particular interest is in avoiding medical problems during surgery) is a good way to achieve leverage. In other words, people already know what good practice is, but because they exercise discretion they may deviate from good practice. The checklists are a way to get people to stick with what works. In contrast, an article I suggested you read argued for discretion and that overly prescribing procedures would reduce medical success. So there isn't universal agreement about standardizing procedures being a good thing.
On the incentives themselves, very few people addressed the following question: What, if anything, happens to the baseline compensation? Does it stay fixed or does it get adjusted as well? For our class, that would have been a natural question to ask. It speaks to the question of whether the employees earn rents or not (in the case of rewarding innovation) or if the punishment is credible (when the punishment is in place for the case where innovation doesn't occur). A few students recognized that the employee can quit, which limits the size of the possible punishment.
Then one might have asked whether two employees who are in the same job, with similar seniority and with both trying hard to innovate, might nonetheless experience that one succeeds and the other does not - what would the consequences be? A few people said the reward scheme would make the employees competitive with one another, but I didn't understand that. That they'd regard it as unfair, however, seems natural to me. We talked in class about fairness specifically in the context of Akerlof's Gift Exchange model. Nobody tied these incentives schemes to that, but it stands to reason that if either the reward or punishment scheme were implemented that it would result in less gift giving activity in the organization.
Finally, on other mechanisms, a few students offered up interesting ideas here, but only a few. One of those is professional development activities (more education) for employees, where promoting innovation is part and parcel of the professional development. Another is to look for symbolic/cultural ways at work to promote innovation. Just to show what I mean here, I mentioned in class that I attended something that at the time was called the Frye Leadership Institute. (Frye is somebody's surname, and the institute was named after him.) A few years ago they rebranded the institute and now it is called the Leading Change Institute. In other words, innovation is now in the name of the thing. Symbolic and cultural means are something we discussed but didn't hammer on in class, because they are not economics. But they can matter. B&D make that point repeatedly. It is one of their four frames.
Question 1 was the essay question on the first midterm. So you had seen it before. Question 3 was on the final from last year and we reviewed it on the last day of class. Question 2 was new for you. It was there, in part, to see what you would do with it. The means on questions 1 and 3 were right about at 81 (out of 100). The mean on question 2, was just below 70. I will talk about question 2 below.
One of the things I found interesting is that the vast majority of students accepted the premise of the question without requiring further definition. Let's consider possible ways to further define the issues. I'll begin with this rather famous quote from Thomas Edison.
I haven't failed. I've just found 10,000 ways that won't work.
So one issue is that invention takes time and one might be "in process" for quite a while. How does the time component get managed? Do we look for success after a fixed time window or let the process play out? Nobody talked about that.
Another issue is whether the invention is fundamentally new for the entire industry or if instead it is something that has been tried elsewhere but is new for this particular organization. In the literature on diffusion of innovation, there typically is a difference made between an innovator, on the one hand, and an early adopter, on the other. Each engage in risks but of a different sort.
Then there might be an issue of whether the innovations themselves could be larger or smaller and hence if the reward or punishment varied, either absolutely or relatively, as a consequence. People didn't take on that issue much at all.
I'll do one more of these and stop, but know that this list could be expanded without too much difficulty. There is the question of how innovation translates into productivity and profitability for the firm. There is a notion called leverage, which in this context means small changes that have big positive impact. There is a recent book by Atul Gawande called The Checklist Manifesto, where he argues that implementing checklists for procedures that have some complexity to them (his particular interest is in avoiding medical problems during surgery) is a good way to achieve leverage. In other words, people already know what good practice is, but because they exercise discretion they may deviate from good practice. The checklists are a way to get people to stick with what works. In contrast, an article I suggested you read argued for discretion and that overly prescribing procedures would reduce medical success. So there isn't universal agreement about standardizing procedures being a good thing.
On the incentives themselves, very few people addressed the following question: What, if anything, happens to the baseline compensation? Does it stay fixed or does it get adjusted as well? For our class, that would have been a natural question to ask. It speaks to the question of whether the employees earn rents or not (in the case of rewarding innovation) or if the punishment is credible (when the punishment is in place for the case where innovation doesn't occur). A few students recognized that the employee can quit, which limits the size of the possible punishment.
Then one might have asked whether two employees who are in the same job, with similar seniority and with both trying hard to innovate, might nonetheless experience that one succeeds and the other does not - what would the consequences be? A few people said the reward scheme would make the employees competitive with one another, but I didn't understand that. That they'd regard it as unfair, however, seems natural to me. We talked in class about fairness specifically in the context of Akerlof's Gift Exchange model. Nobody tied these incentives schemes to that, but it stands to reason that if either the reward or punishment scheme were implemented that it would result in less gift giving activity in the organization.
Finally, on other mechanisms, a few students offered up interesting ideas here, but only a few. One of those is professional development activities (more education) for employees, where promoting innovation is part and parcel of the professional development. Another is to look for symbolic/cultural ways at work to promote innovation. Just to show what I mean here, I mentioned in class that I attended something that at the time was called the Frye Leadership Institute. (Frye is somebody's surname, and the institute was named after him.) A few years ago they rebranded the institute and now it is called the Leading Change Institute. In other words, innovation is now in the name of the thing. Symbolic and cultural means are something we discussed but didn't hammer on in class, because they are not economics. But they can matter. B&D make that point repeatedly. It is one of their four frames.
Thursday, December 11, 2014
Grades Updated In Moodle
I have done the grade update that now allocates all the points except for the final exam. Included were 20 points for the remaining Excel (one entry for the Shapiro-Stiglitz model, another entry called Freebie that everyone received), 50 points for Comments on blog posts, and 125 points for Blog Posts Second Half. With the last there was also some text feedback to accompany the grade. And I updated the individual blog posts to track your submissions. Note that I never did enter the submission for the IlliniBucks post, but that has been accounted for already in the Blogs Posts First Half.
I also made a grade distribution of the all the points allocated. It too can be found in Moodle. It is a file called All But Final.
So you should know where you stand.
(Students doing Extra Credit projects, those points have yet to be allocated. I will do that over the weekend.)
I also made a grade distribution of the all the points allocated. It too can be found in Moodle. It is a file called All But Final.
So you should know where you stand.
(Students doing Extra Credit projects, those points have yet to be allocated. I will do that over the weekend.)
Tuesday, December 2, 2014
Last Year's Final Exam
Final Exam fall 2013
The final this time around will be in the same format. I haven't written it yet and probably won't till after class on Thursday.
The final this time around will be in the same format. I haven't written it yet and probably won't till after class on Thursday.
Wednesday, November 19, 2014
A couple of pieces on Medicine and moral hazard
This is from today's Op-Ed page. It is called How Medical Care Is Being Corrupted. The issue is how doctors are compensated and if that impacts how they practice - prescribe medications, recommend treatments, etc.
This other one is about medical research, particularly the war on cancer. It is called Grant System Leads Cancer Researchers to Play It Safe. It is quite intriguing and might give you an entirely different sense of what moral hazard means.
This other one is about medical research, particularly the war on cancer. It is called Grant System Leads Cancer Researchers to Play It Safe. It is quite intriguing and might give you an entirely different sense of what moral hazard means.
Monday, November 17, 2014
Excel Homework Due Dec 3 at 11 PM
This is the last Excel Homework.
This homework is on extensions of the basic Shapiro and Stiglitz model, with a particular focus on making the monitoring intensity a choice variable.
You should watch the video presentation of the basic model first. This is a full lecture on the math of the model. It takes about a half hour.
xlsx file
This homework is on extensions of the basic Shapiro and Stiglitz model, with a particular focus on making the monitoring intensity a choice variable.
You should watch the video presentation of the basic model first. This is a full lecture on the math of the model. It takes about a half hour.
xlsx file
Friday, November 14, 2014
Please Read This Essay Before...
...
1) You write the blog post due 11/21 on personal reputations, and
2) Also before class on Thursday 11/20.
The essay has a bit of math that I hope is easy to follow and has quite a bit of discussion of reputational mechanisms as means of enforcing good behavior. I think you'll like the discussion and I hope it makes sense to you.
The essay was revised last year. It matched that class quite well. I originally wrote it for an intermediate micro class I taught in spring 2011. (Aren't you glad you didn't take 302 from me?) We've done a few things differently this time around but there is still enough there that should fit what we've done.
1) You write the blog post due 11/21 on personal reputations, and
2) Also before class on Thursday 11/20.
The essay has a bit of math that I hope is easy to follow and has quite a bit of discussion of reputational mechanisms as means of enforcing good behavior. I think you'll like the discussion and I hope it makes sense to you.
The essay was revised last year. It matched that class quite well. I originally wrote it for an intermediate micro class I taught in spring 2011. (Aren't you glad you didn't take 302 from me?) We've done a few things differently this time around but there is still enough there that should fit what we've done.
Tuesday, November 11, 2014
Another Grade Upload in Moodle Done This Morning
There were grades upload for the last four Excel Homeworks and the last four Blog Posts. Note that the blog post columns are just for tracking that you did them. There are no points being allotted. Moodle requires me in making the columns to assign some points, so each blog post column has 1 point assigned, but you are not receiving those points. The points you receive for blogging are given in a block. One block was done at mid semester, which you've already received. The next block will be done at the end of the term, before the final.
Thursday, November 6, 2014
A little celebration today
I bought the cider and doughnuts, so we are on for today. I hope there isn't any precipitation when heading to class.
Tuesday, November 4, 2014
For Practice - Midterm 2 from last year
I wouldn't look at this till you've done the Excel Homework on the Principal-Agent Model. But then, this Exam should be intelligible to you. Also note, question 2 from last year's Midterm 1 is fair game as well.
Saturday, November 1, 2014
In case you are not confused enough about the difference between conflict and an argument...
...this is pretty funny and should be part of your cultural repertoire.
Thursday, October 30, 2014
Blog Post About Bargaining Homework/My Laptop
Here is the link to the post The Diffeq From Hell, which I wrote a couple of years ago. I think it will be most beneficial to you to explain why you have this homework on Bargaining in the first place, and what economic insights the homework is supposed to provide. You might also be amused by the history of the construction of the Arbitrator's rule, which is documented in that post. Math-wise, this was the most difficult homework for me to make. It is ironic that you found it much easier than the prior homework on Adverse Selection in Insurance markets, which may have been tougher for you but was far easier for me - from the point of view of the underlying math modeling.
* * * * *
For those who were in class today and watch me go into a panic attack as system 8.1 installed on my laptop while I wasn't paying attention, this just to let you know that when I got home it seemed it had actually installed correctly, unlike my two previous attempts where it crashed the computer and wouldn't allow it to reboot. So all is well on that score.
Here is wishing you an early Happy Halloween. Good luck with the trick or treating, but don't eat too much candy if you are successful on that end.
* * * * *
For those who were in class today and watch me go into a panic attack as system 8.1 installed on my laptop while I wasn't paying attention, this just to let you know that when I got home it seemed it had actually installed correctly, unlike my two previous attempts where it crashed the computer and wouldn't allow it to reboot. So all is well on that score.
Here is wishing you an early Happy Halloween. Good luck with the trick or treating, but don't eat too much candy if you are successful on that end.
Excel Homework Due Wed 11/5 at 11 PM
This homework is on the simplest possible version of the principal-agent model. It is this model that produces pay for performance as a feature. It is important to understand this base model before we delve into various realistic ways of complicating the model. (Mostly we will talk about that but I might do some additional modeling in class after going over the basic model.) There is a video I'd like you to watch first. I should give you the background you need to do the homework.
Video
The actual homework.
Video
The actual homework.
Tuesday, October 28, 2014
Some follow up reading
During the first part of the class where we went over the blog posts and the possible reasons for why one might be charitable to others, I mentioned the book Excellent Sheep, which I'm currently reading. What I've read so far is not particularly uplifting, but you might find it interesting to shed light on your own circumstance. The focus is on elite college students (think of the Ivy League) and the hoops they must jump through, how that effects them as learners and as human beings. Outwardly creating the appearance of extraordinary competence, inwardly these students are quite miserable and full of doubt. To the extent that you are just like the students characterized in this book, it provides an argument that all of you are deserving of empathy, from your peers and your teachers.
During the latter part of the class in discussing intrinsic motivation, I mentioned the concept known as Flow. The link is to a book by that title. With little effort, you should also be able to find a TED talk on the subject by the book's author, Mihaly Csikszentmihalyi. It is my view that if you've learned that on occasion you can find Flow in what you do, and do so while engaged in an activity that brings some joy or value to others, then you're very close to finding your life's work. And if you learned to do that while in college, then college was a very valuable time for you.
In my own reading, I read Flow after reading Daniel Kahneman's Thinking Fast and Slow. I did that while teaching our course for the first time, when I only had 8 students and taught it as a seminar (but still there were attendance issues). You might find this blog post I wrote at the time interesting as it tries to tie the various themes together. I didn't check all the links in that post but I noticed the particular link to the bat and ball problem was broken, which is why I've provided an alternative here.
During the latter part of the class in discussing intrinsic motivation, I mentioned the concept known as Flow. The link is to a book by that title. With little effort, you should also be able to find a TED talk on the subject by the book's author, Mihaly Csikszentmihalyi. It is my view that if you've learned that on occasion you can find Flow in what you do, and do so while engaged in an activity that brings some joy or value to others, then you're very close to finding your life's work. And if you learned to do that while in college, then college was a very valuable time for you.
In my own reading, I read Flow after reading Daniel Kahneman's Thinking Fast and Slow. I did that while teaching our course for the first time, when I only had 8 students and taught it as a seminar (but still there were attendance issues). You might find this blog post I wrote at the time interesting as it tries to tie the various themes together. I didn't check all the links in that post but I noticed the particular link to the bat and ball problem was broken, which is why I've provided an alternative here.
Thursday, October 23, 2014
Excel Homework Due Wed 10/29 at 11 PM
The homework is on bargaining. Note that M&R have a discussion of bargaining in Chapter 5. You should read that. The model they go through has both the buyer and seller having two types. In the Excel homework, the model has a continuum of type on each side of the bargain. In that sense it is harder but also more elegant. And, I believe, it should give you a better understanding about the relationship between the private information and the inefficiency created.
There is a fiction in the model that helps to understand what is going on. The fiction is that there is a third party - an arbitrator - who provides rules for how the bargaining will happen, when trade will occur, and at what price. The fiction is necessary because the model is static. Real world negotiations happen over time and to model that correctly one needs a dynamic model. There are such models, but they are well beyond the scope of our class. So we will keep the modeling relatively simple and wave our hands about what happens in real world bargaining.
There is a rather extensive discussion in this homework before you log in. I encourage you to read that carefully and not gloss over it. It is about how to bargain well and what happens in real-world procurement, which entails a good deal of such bargaining. There are practical lessons here that you can carry over to your work life, even if you don't engage in procurement.
There is a fiction in the model that helps to understand what is going on. The fiction is that there is a third party - an arbitrator - who provides rules for how the bargaining will happen, when trade will occur, and at what price. The fiction is necessary because the model is static. Real world negotiations happen over time and to model that correctly one needs a dynamic model. There are such models, but they are well beyond the scope of our class. So we will keep the modeling relatively simple and wave our hands about what happens in real world bargaining.
There is a rather extensive discussion in this homework before you log in. I encourage you to read that carefully and not gloss over it. It is about how to bargain well and what happens in real-world procurement, which entails a good deal of such bargaining. There are practical lessons here that you can carry over to your work life, even if you don't engage in procurement.
Wednesday, October 22, 2014
Homework on Adverse Selection and Tomorrow's Class + Blog Grades Uploaded
Based on last year's class as well as on the observation that nobody has yet to submit a key for the Excel homework due tonight, I would say that conceptually the economic models that are the basis for the homework are more difficult to understand than the prior models that we've done. So I plan to lecture on those models tomorrow. I don't have a video on this. I will cover it only in class, tomorrow.
-----
I have assigned grades for your blog posts during the first half of the course. There are 5 substantive posts included in this assessment. I didn't count the bio post you produced about the famous economists who forms the basis of your alias. Most people are doing a reasonably good job. There are a few laggards. I hope we can get everyone to be writing good posts during the second half of the course.
There were a maximum of 125 points allocated here. In addition to assigning you points, I have also given some comments on your blogging and where I'd liked to see improvement in the second half.
For many students I wrote that you should try to make connections to your own prior posts, class discussion, or ideas from the readings. You might find this awkward at first, since you are also writing to the prompt. Now I'm suggesting that you serve two masters and that is harder. Be that as it may, I encourage you to try it. You'll get better at doing it with practice.
Also, when you make such connections it is natural to link to the content you're mentioning, using the link tool in the blog editor. Having your posts with some links in them creates the impression that you've done your homework. That's a good thing to convey.
-----
I have assigned grades for your blog posts during the first half of the course. There are 5 substantive posts included in this assessment. I didn't count the bio post you produced about the famous economists who forms the basis of your alias. Most people are doing a reasonably good job. There are a few laggards. I hope we can get everyone to be writing good posts during the second half of the course.
There were a maximum of 125 points allocated here. In addition to assigning you points, I have also given some comments on your blogging and where I'd liked to see improvement in the second half.
For many students I wrote that you should try to make connections to your own prior posts, class discussion, or ideas from the readings. You might find this awkward at first, since you are also writing to the prompt. Now I'm suggesting that you serve two masters and that is harder. Be that as it may, I encourage you to try it. You'll get better at doing it with practice.
Also, when you make such connections it is natural to link to the content you're mentioning, using the link tool in the blog editor. Having your posts with some links in them creates the impression that you've done your homework. That's a good thing to convey.
From the Econ Department - Internship/Job Possibility - Homecoming Celebration
From: Newell, Melissa Allison
Sent: Wednesday, October 22, 2014 8:08 AM
To: Econ Faculty
Subject: Northrop Grumman Recruiting Event and Homecoming
Sent: Wednesday, October 22, 2014 8:08 AM
To: Econ Faculty
Subject: Northrop Grumman Recruiting Event and Homecoming
Hello,
Please feel free to pass along the information below and promote
these upcoming events to your undergraduate Economics students (or those
interested in the major). We hope you are able to attend the Homecoming
Celebration on Saturday- it is always a great time and a good way for students
to connect to the Department and meet others.
Sincerely,
Melissa
Northrop Grumman Info Event
Thursday, October 23
5-6pm
114 DKH
Business Casual Attire
Dinner Provided
Internships and Full-Time Positions!
An Executive from
Northrop Grumman (and UI Alumnus) will be presenting on the company and providing information on internships and full-time opportunities! Even if you are not looking for an internship or
full-time job yet, this is a great opportunity to hear about a company who
recruits Econ students.
We have Econ alumni
working for Northrop Grumman (positions such as Financial Analyst), and they
recruit on campus, and are looking for Economics Students. This is a
great opportunity to hear more about the company, ask questions, and network.
Northrop Grumman is a
leading global security company providing innovative systems, products and
solutions in unmanned systems, cyber, C4ISR, and logistics and modernization to
government and commercial customers worldwide.
Economics Homecoming
Celebration
Today is the last day to register to attend our Homecoming Celebration: go.illinois.edu/EconHomecomingRSVP
Saturday,
October 25
9-11am
Tent
on the David Kinley Hall Quad
(DKH Quad is East of the building)
(DKH Quad is East of the building)
Attire: Informal
- ILLINI ORANGE & BLUE
Meet other students, alumni, faculty, and
staff, and it's free! Win prizes, enjoy great food, and celebrate an
Illini and Economics tradition!
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