Friday, March 21, 2014

NC State faculty research in the news

My NC State colleagues David Henard and Christian Rossetti just had a paper come out in the Journal of Advertising Research that is getting international attention.  Titled "All You Need is Love? Communication Insights from Pop Music's Number One Hits," the paper has been featured in stories not just in the US, but also in the UK and Australia.

Henard and Rossetti find that the theme of popular hits has changed over the last 50 years.  Rebellion was in the air in the 1960s and 1970s (I know, I was there -- "Tear Down the Wall," as the Jefferson Airplane sang).   Today themes revolve more along desperation and inspiration (e.g., "Happy"), perhaps a reaction to 9/11.

Henard and Rossetti focus on number one hits.  It would be interesting to see if the results could be generalized; some of the most enduring music never hits the top of the charts (ask Neil Young who has had one number one in his lifetime)  Alternate acts like Bon Iver and Grizzly Bear have been used by Bushmills and Volkswagen to push product.  I am guessing rebellion is pretty strong no longer how you slice the 1960s data; I also am guessing romance has enduring power across the ages from Marvin Gaye's "Let's Get It On" to Drake's "Hold On, We're Going Home."

Sunday, March 16, 2014

How best to help low-wage workers

President Obama has made two proposals to help low-wage workers: an increase in the minimum wage and expansions in eligibility for overtime.  On the minimum wage front, he already has increased it for federal contractors and wants Congress to approve a $10.10 minimum wage for all.  Economists are fairly split on the merits of increasing the minimum wage; to get a good idea of how split see these two links from Greg Mankiw (hundreds are in favor, hundreds are opposed).

As for overtime, employers hire workers as long as the extra revenue they generate offsets the cost of the worker.  Employees with supervisory responsibilities are not eligible for overtime if they make more than $455 a week.  Obama has directed the Department of Labor to raise that threshold so that more become eligible for overtime.  Once again economists have a split opinion on the desirability of this policy.  A reasonable case can be made that this would have zero impact.  Employers could offset the increased overtime costs by slowing the growth of base pay and cutting employee benefits.  Those who lack the flexibility to cut pay and benefits will trim back on overtime hours and employment.  The federal government can set pay rules, but it cannot repeal the law of marginal cost equalling marginal revenue.

The Earned Income Tax Credit is another mechanism for helping low-wage workers, as Princeton economist Alan Blinder argues in this recent WSJ op-ed.  This policy receives nearly universal support from economists.  However it is not so popular in Washington because it forces the federal government to come up with the extra cash for low-wage workers instead of trying to stick employers with the bill.

Wednesday, March 12, 2014

Student loans: more than meets the eye

Things we know: there is more than $1tr in student loan debt; a higher percentage of student loans are 90 days past due than credit card, auto or mortgage debt.  The popular press would have us believe that this is the result of rising tuition.

Reality is much more complicated, as a recent WSJ piece indicates.  Student loans are designed to cover tuition and living expenses.  The terms are relatively attractive and there is little to no screening for credit worthiness.  So student debt can be used to cover everyday expenses when there are no other funding sources available.  WSJ profiled one young man who was unemployed and signed up for part-time community college courses so he could borrow enough money to pay his rent.  A sad case, to be sure, but probably not what the designers of the student loan program had in mind.

If you take out an auto loan or mortgage, you get asked a series of questions designed to gauge the likelihood that you will pay the loan back.  The questions that should be asked about student loans -- which would reflect the odds of completing a program and the success of its graduates -- would shake the world of higher education to its very core.

Tuesday, March 11, 2014

More great ranking news for NC State Jenkins MBA

The US News MBA rankings came out today and, once again, the NC State Jenkins MBA is moving up.  The full-time program moved up 23 spots from #88 last year to #65 this year; the part-time program moved up 12 spots from #73 to #61.  According to Poets and Quants, only one other program made a bigger jump upward.

Why did the ranking go up?  On the full-time side there was improvement across the board: higher recruiter assessment score, higher starting salary and bonus, higher placement rates, higher GPA and GMAT, and more selective admissions.  On the part-time side the incoming class had more work experience.  Among local part-time programs, NC State ranks ahead of Elon (#77), UNC-Greensboro (#80), UNC-Wilmington (#175), Fayetteville State (#184) and East Carolina (#196).

Thursday, March 6, 2014

Big changes for SAT; is GMAT next?

Today's big news story in higher education is the significant changes planned for the SAT.  The exam will make the essay optional, drop obscure vocabulary words, and no longer penalize for guessing the wrong answer.  Make no mistake -- none of this would be happening if the SAT had not been losing market share to the ACT.  Competition in the testing market will hopefully yield a better predictor of college performance.

But I would not be so sure.  The SAT now better measures knowledge obtained in high school.  But the main reason we have the SAT in the first place is that high school grades are a far from perfect predictor of college grades.  By testing different types of mathematical and verbal skills, it provided an independent measure of college potential, a second chance for students who had a bad year or two in high school.

The GMAT is facing a similar problem, losing market share as more schools (including NC State) accept the GRE or waive test scores for some applicants (e.g., those with masters degrees).  Poets and Quants reports that the volume of GMAT test takers dropped by 17% in 2013.

A testing operation has to add value to admissions decisions.  The GMAT works well for quant skills and deductive logic, not so well for leadership and communications.  If employers continue to take the former as a given for any MBA and place more emphasis on the latter, expect GMAT to either adapt or be replaced by other predictors.

Monday, March 3, 2014

NC State Jenkins MBA featured in Poets and Quants

Poet and Quants is a blog that regularly reports news about the world's most respected MBA programs.  Today P&Q posted a lengthy article about NC State's Jenkins MBA, highlighting our technology emphasis and industry partnerships.  Well worth reading!