More on ways to go

An arguably nicer, but perhaps more embarrassing, way to go.

Hat tip: Ed Vytlacil (on FB)

Experimental evaluation of Head Start

The official reports from a random assignment evaluation of Head Start were released in January; go here for the Executive Summary. Head Start is the federal pre-kindergarten program for disadvantaged children in the US. It dates back to the War on Poverty of the 1960s. It is one version of what you get when you try and scale up, but not spend too much money on, high intensity interventions like the famous Perry Preschool project in Ypsilanti that receives so much attention in the literature and whose long term experimental impact estimates are often held up as justification for expansion of programs such as Head Start.

I have not had a chance to read over this carefully but the results are pretty important. The study has three key design elements: (1) random assignment of access to Head Start; (2) the study sites are a random sample of Head Start sites around the country, which suggests strong external validity; and (3) a large amount of substitution into other types of center-based childcare and also a surprisingly large amount of control group cross-over into Head Start. There is also a non-trivial amount of treatment group dropout.

Factor (3) is important in interpreting the rather lackluster findings. The study is comparing the offer of Head Start access to the best alternative (which in some cases turns out to be a different Head Start center not in the experiment). The study is consistent with Head Start having a positive effect relative to the child staying home with the parents, but not much in the way of effects relative to the alternatives chosen by the parents in the absence of access to Head Start.

This study should slow the rush to spend large sums on these programs and hopefully will encourage a systematic program of research aimed at learning what types of early education programs have persistent impacts that cover their costs for this age group.

Arthur Sweetman

My old friend Arthur Sweetman takes a new position at McMaster. Congratulations!

We interviewed Arthur when he was first on the job market back when I was an assistant professor at Western Ontario. Yes, I feel old!

Hat tip: Rebecca Warburton

Not a nice way to go

An electrifying ending.

Hat tip: Ken Troske

On stock brokers

An entertaining Atlantic piece on why you should fire your broker.

I learned this lesson myself back in the 1990s. I inherited about 20K from my grandmother when I was in college. I put the money in an asset management account at Merrill Lynch; at the time, such accounts were exciting and new. In those days, the account came with an actual personal broker, my broker was a gorgeous young women, only a few years older than I was, with a habit of wearing smart business suits with very short skirts. I would drive or take the bus to downtown Seattle every few months to meet with her. She was actually a good broker in the sense that the REIT she had me put about half the money into has continued to pay a very nice dividend year after year through ups and downs. I still have it. She also did me the favor (as I learned later this is very much a discretionary favor) of letting me in on the Costco IPO. I made several thousand dollars on that in less than a week.

Sadly, she moved on to better things and was replace by someone I remember only as the frat boy broker. He was the sort of broker that the Atlantic piece is all about. He had me invest in something called Merrill Lynch's "emerging growth fund". During a several year period in the 80s when the market roughly tripled, the "emerging growth fund" grew by exactly zero. I suppose I should be happy that it did not go down! I got smart and learned my lesson at some point in the 90s and sold it and resolved never to deal with brokers again. I suppose I should be glad that this lesson cost me only (in opportunity cost) a few thousand dollars.

Economists worry about markets with information asymmetries for good reasons!

US Postal Service

I think it likely made good sense to have a government-run monopoly post office in the 1700s and for much of the 1800s, at least in relatively undeveloped areas. I doubt it has made sense (that is, economic sense in the context of comparative institutional design) anywhere in the US since 1900. I expect the advent of email will finally, slowly, rid us of what has become a monument to economic inefficiency and technological stasis. This article provides some further evidence on that score.

The question then becomes, how best to bring this object lesson in public management to a close? There will be lots of upset as small communities lose their heavily subsidized postal outlets and still more as postal workers lose jobs that pay far better than other jobs requiring similar skill sets (and provide generous pensions and job security).

My thought is that it is time to repeal the laws giving the postal service a monopoly on mail delivery and that this represents a better alternative than trying to privatize the current institution, either with or without its legal monopoly intact. You want the end result to be a vibrant, competitive postal delivery industry, not the postal equivalent of GM, and I think privatization at this point would yield the latter.

NYU prof on classroom etiquette

This is presented as some sort of great flaming but it actually seems to me pretty tame. Maybe the standards of professorial brutality are different in the biz school world than in the economics world.

Consider for example the story I have heard attributed to a famous senior faculty member at Princeton who responded to a student's less than brilliant question by walking to the student's seat in the lecture hall, giving the student a quarter and saying "Go call your mother and tell her you are not going to be an economist."

That is a serious slam. The email I linked to is a warm cozy blanket by comparison.

In any case, good advice.

Hat tip: the agitator