Tuesday, June 20, 2017

Do students learn anything in college?

Recent WSJ headline: "Exclusive Test Data: Many Colleges Fail to Improve Critical-Thinking Skills."  Higher education is already being criticized for being overly expensive, stifling free speech with political correctness, and having all too many graduates without jobs.  Now we have a new claim: that many students do not really learn much as they accumulate credit hours.

The study cited by WSJ compares scores on a critical thinking test taken by freshmen and seniors at a wide range of schools.  At some prestigious schools (e.g., UT-Austin), the scores of seniors are about the same as those of freshmen.  The schools with the largest "improvement" in scores include Plymouth State and Western Carolina.  

On the surface this would imply that higher education is not delivering on its promise to develop higher level critical thinking skills.  Here is another interpretation: schools like UT-Austin admit students with very strong skills in this dimension to begin with, so the change in scores is negligible three years later.  Also, the composition of the test-taking class changes considerably in some schools.  Almost half of the freshmen at Plymouth State and Western Carolina never graduate, so most of the score increase at those schools could be explained by weeding out the weakest students.

Finally, critical thinking skills are important but they are not the sole measure of academic accomplishment.  Compare the scores of freshmen and seniors on subjects such as biochemistry, electrical engineering, and finance to get a better overall picture.

Saturday, June 17, 2017

A sweet NAFTA deal for sugar producers

The US and Mexico just concluded a deal on sugar trade.  A bit of background is in order.  The US is globally competitive for many agricultural products; sugar is not one of them.  Under NAFTA the US started importing significant amounts of Mexican sugar.  US sugar refiners protested and, to make a long story short, the result is a new set of NAFTA terms on sugar.  Net result: import restrictions and higher prices.  A win for US producers but a loss for US sugar consumers, US producers of products that use sugar and Mexican sugar producers.  A classic win-lose-lose-lose deal.  Perhaps a preview of what will happen when the gang that brought us "The Art of the Deal" gets their hands on the rest of NAFTA?

Friday, June 16, 2017

Ticket pricing on Broadway

Want to see a big hit such as "Hamilton" or "Hello Dolly" with Bette Midler on Broadway? Be prepared to pay $750 at the box office and well over $1000 in the secondary market.  These prices generate headlines and claims that Broadway is unaffordable for the average NYC visitor.

This NYT piece sheds a light on the economics behind live theatre pricing.  As it turns out, there are many theaters on the Great White Way and bargains can be had.  The average ticket price is just over $100 and, on most nights, you can stand in line at TKTS and score a (not great) seat for under $40.

What has changed in recent years is the adoption of dynamic pricing.  The same tools that airlines pioneered have come to the arts and entertainment world.   Ticket prices ratchet up for the most popular shows to ration demand.   By doing so there also is a clear match between the public's willingness to pay and the reward structure for those producing the shows:
From an economics perspective, “this is simply a rationing problem” ... If you keep prices low, people will buy tickets and resell them on the secondary market. Someone is going to pay a market-clearing price, no matter how high. The only question is who should get the money: the investors and performers and creators, or a speculator who managed to snap up the tickets the moment the box office opened?”
The Times article provides some helpful hints for those seeking the best deals: look for weekday shows and visit at an off-peak time such as January or September.