YOU MIGHT THINK that MBA students at MIT can easily deduce how much water is in a bathtub, based on the flow of water in and out. But you'd be wrong! Said bathtub is just one example of a "system" with "stocks" (e.g., water level) and "flows." Other examples are greenhouse gases in the atmosphere, customers in a store, or money in your bank account. Researchers at MIT, Carnegie Mellon University, and George Mason University found that most of their students had trouble understanding even supposedly straightforward systems with one stock, one inflow, and one outflow. The researchers conclude that the poor performance reflects a fundamental flaw in how we think about accumulation.
Cronin, M. et al., "Why Don't Well-Educated Adults Understand Accumulation? A Challenge to Researchers, Educators, and Citizens," Organizational Behavior and Human Decision Processes (forthcoming).
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THERE MAY BE some hidden benefits to being a socially or environmentally "responsible" firm. Two economists considered the advantages such firms might theoretically have in recruiting valuable workers. First, they noted that employees may be willing to work for lower wages if a firm is more responsible, although this difference may not be enough to pay for the firm's good practices. Second, they noted that, for a given wage, responsible firms are more likely to attract employees with a corresponding sense of responsibility - employees who are less likely to shirk and are more productive. One implication is that the importance of being a responsible firm increases as a function of the need to employ self-motivated workers. Responsible firms might even be able to drive all other firms out of business if having self-motivated workers is sufficiently important.
Brekke, K. and Nyborg, K., "Attracting Responsible Employees: Green Production as Labor Market Screening," Resource and Energy Economics (forthcoming).
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WHETHER WE LIKE it or not, stereotypes inform our attitudes and behavior toward others. But we may be just as vulnerable to our own stereotypes of ourselves. Researchers conducted experiments on students at Harvard University, Temple University, and the University of Michigan to see if prompting people to consider their own identity changed their thinking about time and risk. The researchers administered brief "questionnaires," some of which were actually meant to prime thoughts about the subject's ethnic or gender identity, and then had them indicate preferences for receiving different amounts of money, at different times or with different odds. Asian-Americans whose identity was primed exhibited more patience. African-Americans whose identity was primed became more risk-averse - even though they were generally less risk-averse than their white peers initially. When gender was primed, men and women tended to conform to whatever stereotypes they held about their own gender.
Benjamin, D. et al., "Social Identity and Preferences," National Bureau of Economic Research (April 2008).
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NEW RESEARCH INDICATES that bullying may do more to interfere with education than overcrowded classrooms. Economists in Britain analyzed data from a large sample of people born 50 years ago and interviewed at ages 7, 11, 16, 23, 33, and 42. Their mothers were also interviewed about their child's bullying experiences at ages 7 and 11. Being bullied was more detrimental to subsequent academic achievement than being in a larger class, they found. However, the bullies themselves paid an even higher academic price than those who were bullied. The effects of being bullied, unlike that of class size, also persisted into adulthood, in the form of lower wages, especially for people bullied later in childhood.
Brown, S. and Taylor, K., "Bullying, Education and Earnings: Evidence from the National Child Development Study," Economics of Education Review (August 2008).
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IF YOUR SON or daughter is not sure what to study in college, here's some research that just might help them in the long term, at least financially. An analysis of a large data set on college graduates confirms prior research (and common sense) that engineering degrees garner the highest income and arts/social science degrees the least, with business and science/math degrees somewhere in the middle. The analysis, however, also indicated when a second major can pay off. Two engineering majors or science/math majors are not worth more than one. Yet it always pays to add an engineering major to another kind of major. A business and science/math double major is worth more than either one by itself. It doesn't pay to add an arts/social science or education major to a business, science/math, or engineering major. And, finally, women get more out of engineering or science/math degrees, whether as single or double majors.
Del Rossi, A. and Hersch, J., "Double Your Major, Double Your Return?" Economics of Education Review (August 2008).
Kevin Lewis is a columnist for Ideas. He can be reached at email@example.com.