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Truth and Consequences

A roundup of research by economics graduates

Last year's Nobel Prize for Economics was shared by two scholars whose chief contributions to the discipline were analytical rather than theoretical: Each had coined statistical equations that could be used to study human behavior. To many, the award recognized a revolution in the field.

"In recent years there has been an explosion of empirical or data-oriented work," says Peter Ireland, chairman of BC's economics department. Though the Internet and advanced computing capabilities are making data more accessible, what's driving the trend "is really economists themselves," says Ireland. "Lately we've developed interesting ways of looking at data, coming up with new statistical techniques, new econometric techniques for applying and analyzing information."

Associate economics professor Robert G. Murphy, director of senior honors theses, agrees. "There's always been an empirical emphasis," he says, but there's been a resurgence prompted in part by "the recognition that if economists are going to be relevant in social debate, we need to speak to the real world, to tie theories down to the data."

Students too are embracing the movement, using statistical methodologies to analyze everything from the career paths of overeducated waiters to the prices of old comic books. Three projects by recent BC graduates illustrate the trend.

POINT OF PRIVILEGE  When James Monks, Ph.D. '95, decided to examine the notion that unqualified students were getting into top colleges merely because they were so-called legacies -- the children of alumni -- he asked himself, If that's true, how do they fare once they arrive on campus?

In "The Academic Performance of Legacies," published in the April 2000 issue of Economics Letters, Monks analyzed the records of nearly 12,000 college seniors from 27 private, selective institutions. He found that at first glance it appears legacies perform as well as or better than their campus peers.

And well they should, says Monks, now an economist at the Consortium on Financing Higher Education, in Cambridge, Massachusetts. "By definition," he says, legacies "have college-educated parents; they are largely white and affluent." But once you control for those attributes, he says, the academic distinction almost disappears. Legacies in fact do less well than their nonlegacy counterparts, though the difference is very slight.

"If droves of unqualified kids are getting in," Monks concludes, "they're not doing too badly once they get there."

According to research by Michael Lowell Hansen, Ph.D. '00, parents nagged by fear that their child will forever hinder his or her career by driving a cab or skiing professionally for a few years after graduation may have a point.

Hansen, now an economist at the Center for Naval Analyses in Alexandria, Virginia, won BC's Donald and Helene White Prize for the Outstanding Dissertation in the Field of Social Sciences for his paper, "College Graduates in Noncollege Jobs: Theory and Evidence." In it he mined census data to analyze the impact of delaying the start of a career for a job that "doesn't pay extra for college graduates."

Though Hansen did not examine the motives of young college-educated carpenters, cashiers, cooks, and office clerks to determine whether graduates were looking to "find themselves" before stepping into a career, or simply couldn't get a job in their fields, his study confirms parents' nightmare that those who take noncollege jobs might never catch up financially to their fellow graduates.

"By and large," Hansen says, "you see a lot of people moving from one noncollege job to another." These workers don't generally stay with the same employer, Hansen says, but they do tend to stay on the same career path; in other words, a waitress with an English degree might end up at six different restaurants in her life, but she may never get out of waitressing.

Hansen did look at why most graduates who start in noncollege occupations stay in them. Some might just prefer them, he says; but he also found that employers tend to stigmatize such graduates, particularly after they have been in noncollege jobs for 18 months or more during relatively good economic times. "When I send my resume to IBM," says Hansen, "and I have two years in high school-level jobs on it, IBM says, This guy hasn't been on a traditional career path. Is there something wrong with him?"

COMIC BELIEF  Leonard Coyer '00 chose for his senior honors thesis a topic that might appeal more to students themselves: "Hedonic Price Indexes and the Market for Collectible Comic Books."

"I've been reading comic books since I was 12 years old," says Coyer, an assistant buyer at Filene's department store in Boston. "I wanted to write my thesis on something that I'd enjoy, so it wouldn't seem so much like work."

Good idea, except that he ended up hand-entering the data from "a couple thousand samples and probably 25 variables" into his computer. Taking his information mainly from the Overstreet Comic Book Price Guide, he examined how the price of an edition is determined not only by supply and "creator" variables -- whether the person who drew the strip is alive or dead, for instance -- but also by such esoterica as whether a particular issue tells a character's origin, the acquisition of "new equipment," and even a character's costume change.

Coyer says his research taught him less about comic books than about the bubble effect -- when irrational expectations for profit falsely inflate prices. "When they announced they were going to kill Superman, wow, that was the biggest thing since his first appearance," he says. "Within a week the issue was selling for a hundred bucks or more. I wish I had gotten rid of mine then, because now I can't get 20 bucks for it."

The issue would be worth more, Coyer says, "if, one, they hadn't printed so many copies, and two, they hadn't brought him back."

Elizabeth Gehrman

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