U.S. Math Education Still in the Doldrums

Every three years, the OECD, in the PISA assessment, studies 15-year-olds around the world to measure performance in reading, mathematics, and science. The results of the 2012 PISA assessment, which had a particular focus on mathematics, just came out and the United States does not fare well: "Among the 34 OECD countries, the United States performed below average in mathematics in 2012 and is ranked 26th." I worry not so much about the rank, but about the low absolute level of proficiency to get this rank.

The U.S. students' particular strengths and weaknesses are even more distressing:

Students in the United States have particular strengths in cognitively less-demanding mathematical skills and abilities, such as extracting single values from diagrams or handling well-structured formulae. They have particular weaknesses in items with higher cognitive demands, such as taking real-world situations, translating them into mathematical terms, and interpreting mathematical aspects in real-world problems.

What Do You Want to Know About Fighting Poverty With Cash Payments?

If you happen to be in New York on Mon., Nov. 11, you might want to come see Richard Thaler and Dean Karlan talk about "using evidence and behavioral economics to fight poverty." The event (info here) is run by the Innovations for Poverty Action, of which Karlan is president. I will moderate the Thaler-Karlan discussion -- which means I get to ask them any questions I want about whether and why it is a good idea to fight poverty by giving cash directly to poor people rather than the traditional means of directing aid toward institutions and hoping that it trickles down fruitfully. (There are, of course, more options than just those two.)

In our recent podcast called "Would a Big Bucket of Cash Really Change Your Life?,” we looked at whether a windfall helps a family across the generations. The short answer, at least in the case of the 19th-century land lottery that we discussed: no.

How Cost Impacts College Applications

A new NBER paper (abstract; PDF) by Amanda Pallais looks at how small fees impact the application behavior and outcomes of low-income students. Using data from the ACT, she found that an increase in the number of free score reports that students were permitted to send to colleges resulted in students sending their scores to a wider range of colleges, with low-income students attending more selective colleges. These outcomes were surprising because the non-free score reports were a mere $6. The abstract:

This paper estimates the sensitivity of students' college application decisions to a small change in the cost of sending standardized test scores to colleges. Using confidential ACT micro data, I find that when the ACT increased from three to four the number of free score reports that ACT-takers could send, the fraction of test-takers sending four reports rose substantially while the fraction sending three fell by an offsetting amount. Students simultaneously sent their scores to a wider range of colleges. Using micro data from the American Freshman Survey, two identification strategies show that ACT-takers sent more college applications and low-income ACT-takers attended more selective colleges after the cost change. The first strategy compares ACT-takers before and after the cost change, controlling for time trends and covariates, and the second estimates difference-in-difference regressions using SAT-takers as a control group. Back-of-the-envelope calculations suggest that by inducing low-income students to attend more selective colleges, the policy change significantly increased their expected earnings. Because the cost of sending an additional (non-free) ACT score was merely $6 throughout, this sizable behavioral change is surprising and suggests that students may use simple heuristics in making their application decisions. In such a setting, small policy perturbations can have large effects on welfare.

The Millennium Ethical Fallacy: Why Ignore Future Children?

Economist Jeffrey Sachs, the force behind the Millennium Villages Project, is in the news as a book chronicling his efforts is released - Nina Munk’s The Idealist: Jeffrey Sachs and the Quest to End Poverty.  You can read about it in the Wall Street Journal, or read excerpts in the Huffington Post.  Sachs’s project is a major effort at a new way to fight poverty in Africa, as Joe Nocera, writing in The New York Times, explains:

The quest began in 2005, when Sachs, who directs the Earth Institute at Columbia University, started an ambitious program called the Millennium Villages Project. He and his team chose a handful of sub-Saharan African villages, where they imposed a series of “interventions” in such areas as agriculture, health and education. The idea was that these villages would show Africa — and the world — how the continent could loosen the grip that extreme poverty had on so many of its people.

Sachs admirably raised millions, drew attention to efforts to alleviate poverty around the world, and launched Millennium Villages in several countries. However, the reviewers hone in on the book’s discussion of many of the difficulties, such as drought, disease, locals who resisted the idea of selling their prized camels at the new markets set up for them, or locals who used the anti-malarial bednets on their goats rather than their children.

Does Child Abuse Rise During a Recession?

How do economic conditions affect the incidence of child abuse?  While researchers have found that poverty and child abuse are linked, there's been no evidence that downturns increase abuse.  A new working paper (PDF; abstract) by economists Jason M. Lindo, Jessamyn Schaller, and Benjamin Hansen "addresses this seeming contradiction." Here's the abstract, with a key finding in bold:

Using county-level child abuse data spanning 1996 to 2009 from the California Department of Justice, we estimate the extent to which a county's reported abuse rate diverges from its trend when its economic conditions diverge from trend, controlling for statewide annual shocks. The results of this analysis indicate that overall measures of economic conditions are not strongly related to rates of abuse. However, focusing on overall measures of economic conditions masks strong opposing effects of economic conditions facing males and females: male layoffs increase rates of abuse whereas female layoffs reduce rates of abuse. These results are consistent with a theoretical framework that builds on family-time-use models and emphasizes differential risks of abuse associated with a child's time spent with different caregivers.

Now Hiring

I have two exciting (at least what I consider exciting) job openings at Innovations for Poverty Action, both helping to design and test applications of behavioral economics to savings. Please help get the word out (note, they require some specialized expertise and experience, ideally someone with consumer banking experience).

Post #1: Manager or Director of our US Household Finance Initiative (USHFI). This initiative uses ideas from behavioral economics to test ideas to improve consumer finance policies and products in the United States. The position will require managing a number of projects, but here’s one example: Both debt and savings are all about small deposits and large withdrawals. But order matters. And habits matter. Banks help us form habits to pay down debt (they’ll hunt us down if we don’t). When someone is paying down expensive (higher than they can reasonably expect to earn on any investment) debt, they shouldn’t simultaneously accumulate savings. But how can we shift someone quickly (ideally automatically) into savings right when the debt is fully paid off? The plan is to have a seamless transition moment, so that the payments continue but now go to savings rather than paying down debt. (More info here).

Bad Incentives That Work Quite Well: The Opportunity Cost of Political Partisanship

Nick Kristof, writing in the N.Y. Times:

This is what poverty sometimes looks like in America: parents here in Appalachian hill country pulling their children out of literacy classes. Moms and dads fear that if kids learn to read, they are less likely to qualify for a monthly check for having an intellectual disability.

Many people in hillside mobile homes here are poor and desperate, and a $698 monthly check per child from the Supplemental Security Income program goes a long way — and those checks continue until the child turns 18.

And:

This is painful for a liberal to admit, but conservatives have a point when they suggest that America’s safety net can sometimes entangle people in a soul-crushing dependency. Our poverty programs do rescue many people, but other times they backfire.

The Benefits of the Safety Net

A new working paper (abstractPDF) by Hilary W. Hoynes, Diane Whitmore Schanzenbach, and Douglas Almond examines the effects of in utero and childhood access to the social safety net, specifically food stamps:

A growing economics literature establishes a causal link between in utero shocks and health and human capital in adulthood. Most studies rely on extreme negative shocks such as famine and pandemics. We are the first to examine the impact of a positive and policy-driven change in economic resources available in utero and during childhood. In particular, we focus on the introduction of a key element of the U.S. safety net, the Food Stamp Program, which was rolled out across counties in the U.S. between 1961 and 1975. We use the Panel Study of Income Dynamics to assemble unique data linking family background and county of residence in early childhood to adult health and economic outcomes.

Research from My Favorite Economic Gabfest

I’ve just gotten back home after a terrific few days at the Brookings Panel on Economic Activity.  It’s my favorite gabfest of the year, featuring economic analysis that is both serious research, and also connected to ongoing policy debates.  (OK, I’m biased--I’m an editor, and organize the conference along with Berkeley’s David Romer.)  And while I think some of you may enjoy slogging your way through the latest papers, others may prefer your summaries simpler and lighter. So I went ahead and recorded a few short videos summarizing the papers. I hope you enjoy!

Happiness Up, Poverty Down

This is a crosspost from Consultative Group to Assist the Poor (CGAP).

There was plenty of encouraging information shared at the recent “Reaching the Poorest 2012” meeting, convened by CGAP and the Ford Foundation. Together with my fellow researchers, I was among the panelists who presented the findings of well over five years worth of randomized control trials evaluating the impact of the Graduation Model. The projects that were evaluated in Bangladesh, Pakistan, Honduras, and India showed an impact on the livelihoods of the poorest that were targeted. The results were mostly heartening – they showed that Graduation Program participants typically improved their food security, stabilized and diversified income, and increased their assets.

The benefits we’re seeing in the lives of the poorest are big and important. The results are strong evidence that the Graduation Model can work. (We’ll know even more in a couple years when we have full results from seven pilots, with more sites and longer term results to see if results sustain themselves.) One of the most intriguing, and I believe important, results is the simplest: happiness went up in the two sites where “happiness” was measured (Honduras and West Bengal).  As part of the surveys to measure the impact of the program on their livelihoods, participants were also asked a series of questions on their general level of happiness and mental health. Often we talk about consumption and income as a measure of wellbeing.