Student Research in Economics: 2007-2008
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Quentin Brummet did his honors research with Dr. Ilaria Ossella-Durbal on The Effects of Gender Inequality on Growth: A Cross-Country Empirical Study. |
ABSTRACT: Recently, a large amount of economic literature has focused on the empirical determinants of economic growth, especially the impact of human capital. These studies have established that human capital is a very significant determinant of growth. However, relatively few studies have examined the effect of misallocation of human capital on the basis of gender. Furthermore, those that have studied gender inequality include different measures of inequality and use different control variables. Therefore, this study attempts to investigate what measures of gender inequality are the most significant, using Ordinary Least Squares regressions and more recent data than past studies. The results show that gender inequality in primary education has a significant negative effect on growth, indicating that governments and international organizations should concentrate on promoting primary education equality for females.
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Lane Coonrod did his independent research with Dr. Michael Seeborg on The Effects of Affirmative Action at IWU |
ABSTRACT: For forty years affirmative action policies have had a place within several sectors of American society. With respect to education, many colleges and universities, including Illinois Wesleyan University, have adopted financial aid policies meant to increase diversity. This project identifies the impacts of Illinois Wesleyan's diversity adjustment policies on two levels: the impact on matriculation rates and the eventual impact on academic achievement. The study investigates whether or not minority students are victims of mismatch consequences by being admitted to a selective institution, and OLS regression analysis evaluates the effectiveness of affirmative action policies on prospective students' decision to come to IWU
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Allison Fisherdid her honors research with Dr. Michael Seeborg on An Economic Analysis of the Effect of Steriods on Season Best Performances in Track and Field. |
ABSTRACT: This paper investigates the relationship between steroids and season best performance statistics in track and field over the period from 1949 to 2007. Certain event groups have seen a faster drop in season bests than others. Medical research on the effect of steroids on slow and fast twitch muscle fiber indicates that certain groups (e.g., sprinters, throwers, jumpers) would benefit more than other event groups (e.g., distance runners) from steroids. The theoretical framework underlying my research is production theory from the economics literature where inputs such as coaching, facilities and steroids produce season best performances. Based on this theory and scientific research on muscle fiber, I hypothesize that steroids allow sprinters to improve their season bests more than other event groups. As expected, the regression analysis shows that the effect of steroids on performance varies across track and field events.
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Kunaey Garg did his honors research with Dr. Margaret Chapman on The Effect of Federal Funds Rate Changes on Stock Prices: A Sector-wise Analysis. |
ABSTRACT: The federal funds rate is an indicator of monetary policy that investors in the stock market scrutinize very closely. This paper determines the relationship between changes in the federal funds rate and sector-wise stock indexes. Weekly returns of the Dow Jones ICB classified financial, energy, utilities, materials, industrials, consumer goods, consumer services, information technology, healthcare, and telecommunications sectors are analyzed using separate OLS regression models for each sector. Since the financial sector's earnings are most directly affected by changes in the interest rate, I hypothesize that this sector will be the most responsive. The results show that the utilities, financials, telecom and materials sectors are the most interest rate sensitive, in that order, and that the relationship exhibited between the stock price and the federal funds rate is positive. I conclude by attributing the positive relationship to sector specific demand and supply effects related to the federal funds market.
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Alex Gikas did his independent research with Dr. Michael Seeborg on The Effects of Time Use on Academic Progress. |
ABSTRACT: The cost of college tuition is ever increasing. Students of Illinois Wesleyan University pay over $40.000 per year to attend the fine institution. With such a high price tag, it is expected that students have a most enjoyable college experience. However, students will not be studying or doing school work during their entire college careers. Social behavior is necessary to revitalize students' minds and bodies. Yet engaging in too much of these social behaviors will result in poor academic performance. The purpose of this study is to determine by how much certain social behaviors affect GPA. The data-set is specific to Illinois Wesleyan University students. The theories are tested using the method of Ordinary Least Squares (OLS). The regression results are quite fascinating, with some unexpected outcomes.
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Jim Kjelland did his independent research with Dr. Michael Seeborg on Economic Returns to Higher Education: Signaling v. Human Capital Theory |
ABSTRACT: It is general knowledge that individuals with higher levels of education will, on average, earn higher wages in the labor market. And while this correlation has been established, the causal relationship behind those returns to education is less clear. Past research has been done in an attempt to determine the mechanism by which education increases earnings. Human Capital Theory argues intuitively that education endows an individual with productivity-enhancing human capital, which translates into higher wages in the labor market. Signaling Theory argues instead that education acts merely as a signal of inherent human capital, and that it is the inherent human capital, not acquired human capital, that determines a worker's wage. This study employs OLS regression and is an extension of a previous study carried out by Chevalier et al (2004). Using controls for inherent ability and motivation, it explores the effects of inherent human capital on productivity and wages, and applies that understanding to an assessment of the respective merits of both Signaling and Human Capital Theory.
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Stephanie Panozzo did her independent research with Dr. Michael Seeborg on Trends and Influences in China's Manufacturing Sector. |
ABSTRACT: The increasing globalization of the world economy has led to a large movement of manufacturing activity to China from developed countries, especially over the past decade. However, statistics show that the proportion of Chinese labor devoted to manufacturing has decreased over the same period. Using data from the China Statistical Yearbooks 1994-2006, this study explores this paradox, focusing particularly on the effect of foreign direct investment (FDI) on the number of workers in China's manufacturing sector. Contrary to popular belief, this study finds that FDI has little correlation with the amount of Chinese labor in manufacturing and explores alternative explanations for the decrease, including technological advance and the decline of state-owned enterprises.
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Matthew T. Sheehan did his independent research with Dr. Michael Seeborg on Negligent Economics: An Analysis of the Calculus of Negligence. |
ABSTRACT: Improving the United States' legal liability system will maintain the safety and justice of our country. To advance legal methods, court decisions should be analyzed economically in an attempt to minimize costs and yield the optimal social outcome. This study determines whether the utilization of the calculus of negligence, a common law based on economic analysis, produces just and cost minimizing rulings. These cost minimizing rulings will lead to the aforementioned optimal equilibrium. Six United States court cases, judged on a matter of negligent liability, were selected for this study and analyzed with the criteria presented in the Hand Rule. These criteria establish whether the chosen cases employed the calculus of negligence and to what extent they minimized costs The analysis found that rulings made under the Hand Rule generated the most fair verdicts and deterred costly future decisions. These results suggest that future common law should be rooted in economic analysis.
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Scott N. Swisher IV did his honors research with Dr. Michael Seeborg on Stock Index Pricing with Random Walk and Agent-Based Models |
ABSTRACT: The objective of this work is to empirically test the EMH (efficient market hypothesis) and compare its results to those of a viable agent-based competitor using computational simulation. Random walk and agent-based models for the determination of stock market prices are statistically compared using the criteria of stationarity, randomness, and autogressive behavior. The agent-based approach used, styled the "ant trader" model, is based on the ant model established by Kirman in his 1993 work "Ants, Rationality, and Recruitment." Daily returns on the Hang Seng and Nikkei 225 indices are used over the periods 1987-2007 and 1984-2007. respectively. Preliminary simulations run with the agent-based model indicate high sensitivity to parameter changes; parameter imbalances lead to unrealistic growth in returns. Batch stationarity tests using ADF (Augmented Dickey-Fuller) and PP (Phillips-Perron) tests suggest that the two models behave similarly under the chosen parameter conditions. However, the random-walk model is found to be more consistent with the available data when using the Wald-Wolfowitz runs test and the Lo-MacKinlay variance ratio test. We conclude that the EMH can be theoretically challenged by the ant-trader model, but not empirically. The agent-based model has more realistic assumptions and is more flexible; however, the random walk model agrees with the properties of real-world stock index returns in this case, specifically stationarity and randomness.
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Elizabeth Taylor did her honors research with Dr. Robert Leekley on Determinants of Crack Cocaine Trial and Addiction. |
ABSTRACT: This paper examines how socioeconomic factors contribute to initial use of crack cocaine and to eventual addiction. The paper focuses on two specific questions: what characteristics influence crack cocaine use initially, and why do people continue to use crack cocaine? In order to answer these questions the paper utilizes basic supply and demand theory as well as general physiological theory on drug dependence. These theories, coupled with previous literature, suggest characteristics that would increase the probability of a person trying crack cocaine. However they also indicate that once a person has become addicted, these characteristics no longer matter. Ordinary Least Squares regressions as well as logistic models are utilized on crack cocaine related data from the 2006 National Household Survey on Drug Use and Health. In general, results are consistent with the theory. It also appears that historical associations between race and crack cocaine seem to have changed.
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Eric VanHise did his independent research with Dr. Michael Seeborg on The Difference in Opportunity Cost for Ex-Cons in Blue-Collar and White-Collar Workplaces |
ABSTRACT: The ability to reenter the workforce after a conviction is an important factor in how an individual responds to contact with the criminal justice system. This study seeks to determine whether blue or white collar workers suffer most in terms of reduced wages and income after a conviction by using the National Longitudinal Survey of Youth. This data follows a large cohort of young people from 1997 through 2004. In the end the results from OLS regression analysis support the social underclass theory that says offenders who are blue-collar workers have a higher opportunity cost than offenders who are white-collar in terms of lost wages.
