Tuesday, 17 December 2024

Licensing of economists, and other fortune tellers

There are certain examples I use in my classes where the origins are shrouded in mystery. They likely come from some obscure note I wrote to myself after reading something online. One of those examples is that there are some states in the US that require fortune tellers to be licensed. [*] I use this as an example of the ridiculousness of occupational licensing, which in many circumstances serves no real purpose other than creating a barrier to entry into the market. After all, what harm could befall consumers from receiving the services of an unlicensed fortune teller, that licensing would help to prevent?

It turns out that the fortune teller example is true. Here's the relevant website with links to the law, as well as this hilarious article which asks the most relevant questions:

How cool would that be to have a fortune tellers license? But then I started to wonder how the licensing process would work. Is there a written examination? Do they hand you a blank piece of paper and expect you to divine the questions and then answer them? Is the test multiple choice or essay? Who grades the essays? Other fortune tellers – kind of like bar exam? Is there a road test? Is reading tea leaves or your palm akin to parallel parking?

I was in New Orleans last month. Walking along Bourbon Street, you see a lot of fortune tellers. I could tell the phony ones. They were the ones that beckoned me over. If they could tell the future, then surely they would have known that I wasn't going to walk over to them, no matter how enthusiastic they waved at me?

Anyway, if fortune tellers are licensed in Massachusetts, does that mean economists should need a licence? After all, economists are regularly asked to tell the future - what is going to happen to GDP, unemployment, interest rates, exchange rates, etc.? Whether economists should be licensed or not isn't a crazy question - there have been calls for that in the past (see here and here). And the consequences of bad fortune telling are likely to be as bad, or worse, when an economist gets it wrong as when a palm reader does. Real risk of harm is the reason that governments license doctors, dentists, and nurses. If there is a real risk of harm from people making poor financial decisions on the advice of economists (or other fortune tellers), maybe they do have to be licensed after all?

[HT: Marginal Revolution]

*****

[*] Although, as it turns out, I have referred to licensing of fortune tellers before, with a relevant link (see here).

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Monday, 16 December 2024

How university students and staff used and thought about generative AI in early 2023

Somehow, this report languished in my to-be-read pile for over a year. By Natasha Ziebell and Jemma Skeat (both University of Melbourne), it explores the relatively early use of generative AI by university students and staff, based on a small (110 research participants - 78 students and 32 academic staff) survey conducted in April-May 2023.

While the results are somewhat dated now, given the pace of change in generative AI and the ways that university students and staff are engaging with it, some aspects are still of interest. For example, Ziebell and Skeat found that while over 78 percent of academic staff had used generative AI to that point, only 52 percent of students had done so. I think many of us would be surprised that students were not more experimental in their early use of generative AI. On the other hand, perhaps they were simply reluctant to admit to having used it, given that this was a study undertaken by a university that may sanction students for the use of generative AI in assessment?

The other aspect of the paper that still warrants attention are the opportunities and challenges identified by the research participants, which still seem to be very current. In terms of opportunities:

There were a range of opportunities identified for using generative AI as a tool for teaching and learning:

• to generate study materials (e.g. revision materials, quiz/practice questions)

• to generate resources (e.g. as a teacher)

• to summarise material (e.g. coursework material, research papers)

• to generate information (e.g. similar to Wikipedia)

• to provide writing assistance (e.g. develop plans and outlines, rewording and refining text, editing)

• for learning support (e.g. explaining questions and difficult content, as an additional resource, ‘using it like a tutor’)

• as a research tool (e.g. potential for integrating generative AI with library search tools)

• as a high efficiency time-saving tool (e.g. to sort data, gather information, create materials)

• to encourage creative thinking, critical thinking and critical analysis (e.g. students generate work in an AI program and critique it)

I don't think we've moved on substantially from that list of opportunities, and if a similar survey was conducted now, we would see many of the same opportunities are still apparent. In terms of challenges:

The key challenges identified by respondents can be summarised according to the following categories:

- Reliability of generative AI (inaccurate information and references, difficulty fact checking, misinformation)

- Impact on learning (e.g. misusing generative AI, not understanding limitations of the technology)

- Impact on assessment (e.g. cheating, difficulty detecting plagiarism, assessment design)

- Academic integrity and authenticity (e.g. risk of plagiarism, collusion, academic misconduct)

- Trust and control (reliance on technology rather than human thinking, concerns about future advancements)

- Ethical concerns (e.g. copyright breaches, equitable access, impact on humanity)

Unfortunately, just as the opportunities remain very similar, we are still faced with many of the same challenges. In particular, universities have been fairly poor at addressing the impact on learning and assessment, and in my view there is a distinct 'head-in-the-sand' approach to issues of academic integrity and authenticity. Many universities seem unwilling to step back and reconsider whether the wholesale move to online and hybrid learning and assessment remains appropriate in an age of generative AI. The support available to academic staff who are on the frontline dealing with these issues is superficial.

However, academic integrity and authenticity of assessment are only an issue if students are using generative AI tools in assessment. This report suggests that, in early 2023, only a minority of students were doing so. I don't think we can rely on that being the case anymore. One example from my ECONS101 class in B Trimester serves as an illustrative case.

This year (and for many prior years going back to at least 2005), we've had weekly quizzes in ECONS101 (and before that, ECON100). These quizzes this year had 12 questions, generally consisting of ten multiple choice questions and two (often challenging) calculation questions. These quizzes are each worth about one percent of students' grades in the paper, so they are fairly low stakes. Students have generally taken them seriously, and the median time to complete a quiz has been fairly stable at 15-20 minutes over the last few years. Until B Trimester this year, when the median time to complete started the trimester at over 17 minutes, but by the end of the trimester was down to 7 minutes. It isn't clear to me that it is possible to genuinely complete the 12 questions in 7 minutes. Around 16 percent of students completed the last Moodle quiz in four minutes or less. And it wasn't that those students were rushing the test and performing badly. The average score in the quiz for students completing it in four minutes or less was 86 percent (only slightly below the 92 percent average for students who took longer than four minutes). I'm almost certain that the culprit was one of the (now several) browser extensions that will automatically answer Moodle quizzes using generative AI. Needless to say, this year sees the end of Moodle quizzes that contribute to grades in ECONS101.

Anyway, I digress. It would be really interesting to see this sort of study replicated in 2025, and with a decent sample size - it is hard to say much with a sample of 110, split across students and staff. I imagine that we would see many of the same opportunities and challenges would be salient, but that the uses of generative AI have changed in the meantime, and students would now be at least as prolific as users of generative AI as are staff.

[HT: The Conversation, last year]

Sunday, 15 December 2024

The South Waikato compensating differential strikes again

The New Zealand Herald reported last month:

Robbie Winterson says he faces a battle every time he tries to hire new plumbers in his business.

He runs Go Fox Plumbing and Electrical in Putāruru in the South Waikato. When he puts a job ad on Seek or Trade Me, he says, he either gets no New Zealand applicants at all, or only people completely unsuitable for the job.

“We don’t get good-quality applicants at all. You just don’t get people applying.”

Winterson said plumbers would be paid more than electricians and his firm paid the same as they would get in Auckland, but it was still hard to hire.

The problem here is that Go Fox Plumbing is only offering to pay the same as plumbers would receive working in Auckland. To get quality applicants, they might have to offer more. They face essentially the same problem as South Waikato District Council looking for a health and safety manager in 2018, or a Tokoroa GP looking for a doctor in 2016. In all cases, despite offering what they thought was a competitive wage (compared with elsewhere), the employer was unable to attract good people for the role. 

Aside from difficulty in recruiting, there is one common thread there, and that's the location: South Waikato. Before we talk about why that's relevant (and potentially throw some shade on South Waikato), we need to review a bit of theory on compensating differentials.

Wages differ for the same job in different firms or locations. Consider the same job in two different locations. If the job in the first location has positive non-monetary characteristics (e.g. it is in an area that has high amenity value, where people like to live), then more people will be willing to do that job. This leads to a higher supply of labour for that job, which leads to lower equilibrium wages. In contrast, if the job in the second area has negative non-monetary characteristics (e.g. it is in an area with lower amenity value, where fewer people like to live), then fewer people will be willing to do that job. This leads to a lower supply of labour for that job, which leads to higher equilibrium wages. The difference in wages between the attractive job that lots of people want to do and the unattractive job that fewer people want to do is called a compensating differential. The compensating differential essentially compensates workers for working in jobs with negative non-monetary characteristics compared with working in jobs with positive non-monetary characteristics.

Now, if South Waikato employers (the council, or a GP, or a plumber) are all offering 'competitive' wages and unable to find quality workers, then that suggests that they are not offering wages that are high enough to compensate for the non-monetary characteristics of the job. If they have to offer a wage that is even higher than workers would receive in other locations, that suggests that there is a compensating differential at play. For some reason, it appears that workers perceive that working in South Waikato comes with negative non-monetary characteristics relative to other areas, and are unwilling to move and work there at the wages that are being offered.

Workers' perceptions have an important implication for South Waikato employers. If they want to attract quality applicants, then South Waikato employers either need to find some way to convince potential workers that there are positive reasons for living in South Waikato (South Waikato District Council is clearly trying their best), or they need to pay more to offset the perceived negative characteristics of living in South Waikato.

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Friday, 13 December 2024

This week in research #53

Here's what caught my eye in research over the past week:

  • Dentler and Rossi (open access) use data from Rochester, NY, and find that residents are willing to pay between 7% and 18% of house valuations to avoid crime
  • Kühn and Wolbring (open access) use deepfaked job application videos and find that more attractive applicants score higher in competence ratings and are more likely to be invited for a job interview than less attractive candidates, but that only men consistently profit from their looks, while women benefit from a beauty premium in female-typed, but not in male-typed jobs
  • Akyildirim et al. (including my colleagues Shaen Corbet and Greg Hou) find that a cyberattack leads stock returns to decrease by -0.24%, but the effect reverses in about two weeks
  • Aridor et al. (with ungated earlier version here) summarise the literature on the economics of social media
  • Courtemanche et al. find no evidence that e-cigarette licensure laws affect youth use of 'electronic nicotine delivery systems', using data from the US State Youth Risk Behavior Survey (useful evidence for the New Zealand context as well, I expect)
  • Cannistrà et al. (open access) evaluate the impact of an online game-based financial education tool, and find that it increases financial literacy levels by 0.313 standard deviations, in a sample across four countries
  • Karadas and Schlosky look at the stock trades of US Members of Congress from 2004 to 2022, and find that politicians trade more when Congress is in session and when geopolitical risk is high, as well as making more buy trades when economic policy uncertainty and equity market volatility are high
  • Ash et al. (open access) find that an increase of 0.05 rating points in Fox News viewership, induced by exogenous changes in channel placement, has increased Republican vote shares by at least 0.5 percentage points in recent presidential, Senate, House, and gubernatorial elections

And the latest paper from my own research (or, more accurately, this is the first paper from the thesis research of my PhD student Jayani Wijesinghe, on which I am a co-author along with Susan Olivia and Les Oxley):

  • Our new working paper investigates the trends and factors associated with state-level life expectancy and lifespan inequality (inequality in the length of life) in the US over the period from 1968 to 2020, finding a strong and statistically significant negative correlation between life expectancy and lifespan inequality, and that greater lifespan inequality is associated with state-level education, demographics, various health variables, and income inequality

Also new from the Waikato working papers series:

  • Gibson, Kim and Li examine relationships between nighttime lights (luminosity) and local economic growth for counties in China and the US and districts in Indonesia, and find that GDP-luminosity elasticities vary especially by spatial scale and metro status, and also by period and remote sensing source, meaning that claimed growth effects in previous studies based on nighttime lights may be quite inaccurate