the headmaster ritual the importance of management for school outcomes a the role of school principals largely resembles that of corporate managers and the leadership they provide are often viewed as a crucial component for educational success we estimate the impact of individual principals on various schooling outcomes by constructing a principal school panel data set that allows us to track individual principals as they move between schools we find that individual principals have a substantive impact on school policies working conditions and student outcomes particularly students who attend a school with a one standard deviation better principal receive on average 0 12 standard deviations higher test scores despite having very rich background information on principals it is difficult to determine which principal characteristics that form the basis for successful school management we also find a somewhat mixed picture on what management style characterizes a successful principal we further show that the scope for principal discretion for better or for worse is larger in small schools in voucher schools and in areas with more school competition

the demand for ldc exports of manufactures estimates from hong kong exports of manufactures from developing countries are generally believed to be sensitive to changes in the level of income in the developed countries their major market this belief is grounded on both casual observation especially from the experience of recent recessions and on extensive econometric evidence of low price elasticities and high income elasticities of demand for ldc exports in developed countries this paper argues that both casual observation and previous econometric evidence are misleading the aim of the paper is to show the order of magnitude of the bias contained in previous econometric estimates of price and income elasticities of demand for ldc exports of manufactures due to neglect of supply side influences previous econometric work has neglected the supply side of ldc exports for the simple reason that it is difficult to model it is difficult to model properly the supply of aggregate ldc exports since the determinants of export supply differ from country to country even for a single country modelling export supply is complicated since in addition to foreign demand and domestic supply exports are determined in part by domestic demand for exportables furthermore in most ldcs the incentive to export is strongly influenced by complex and continually changing industrial and trade policy measures there is one major exception hong kong one of the developing world s largest and most successful exporters of manufactured goods the manufacturing sector in hong kong is almost completely specialised exporting 95 of output consequently domestic demand plays no part in determining the volume of exports furthermore factor markets and the manufacturing sector are almost completely free from government intervention the main exception being the textile export restraints imposed at the insistence of importing countries the voluntary restraint agreements vras to which hong kong is subject no doubt affect the composition of exports but not necessarily the volume of aggregate exports if resources in the restrained sectors can easily be redeployed elsewhere in the economy judging from past export growth rates the vras do not appear to have had a significant effect on aggregate export growth in hong kong the results reported below also suggest that hong kong has effectively circumvented the trade barriers it faces the hong kong manufacturing sector in many ways resembles a firm in the

demand for india s manufactured exports abstract surprisingly few estimates exist of disaggregated world demand functions for ldc exports despite the obvious policy importance of the inherent price elasticities time series simultaneous equation estimates are herein presented of world demand for 23 categories of manufactured exports from india tests for homotheticity separability whether price elasticity of demand differs during world recession and for effects of foreign learning about india s exports are reported estimated price elasticities range from below unity to infinity revealing important variations masked by aggregate studies these results raise considerable doubts about policy design from a uniform small country assumption

demand and supply factors in the determination of nie exports a reply in their comment on muscatelli srinivasan and vines msv i992 athukorala and riedel challenge our conclusions regarding the estimated longrun elasticities of export demand for hong kong and our suggestion that estimating a system of export demand and supply could provide a solution to the normalisation problem unfortunately by focusing only on a subset of the issues raised by msv athukorala and riedel tend to ignore some of the key econometric evidence against their preferred small country assumption and their chosen normalisation price dependent export demand there are three key pieces of evidence which tend to point against the small country assumption first let us turn to the normalisation issue as athukorala and riedel note least squares methods such as the phillips hansen procedure will not yield estimates of cointegrating vectors which are independent of normalisation and that is why msv point out that the phillips hansen procedure may only alleviate not solve the normalisation problem ideally when estimating a simultaneous cointegrated model scm one should attempt to test and impose identifying restrictions on the h matrix in a johansen type multi variate var framework

the effects of the u s mfa on small exporters this paper tests two hypotheses regarding the impact of the u s multifiber arrangement restrictions on developing countries exports of textiles and clothing to the united states that the multifibre arrangement is a binding constraint on exporters and that the arrangement encourages the growth of smaller exporters by restricting exports from major sellers pooled data on eight small asian exporters over the period 1975 84 is used results strongly support the hypothesis that the multifibre arrangement has been a binding constraint although the arrangement appears to have diverted demand toward these smaller sellers this effect is counteracted by slow growth in their own restraints copyright 1990 by mit press

the demand for ldc exports of manufactures estimates from hong kong a comment in the march i 988 issue of this journal riedel claims that the findings of relatively low price elasticity of demand by the bulk of time series work are based on the assumption of infinite price elasticity of export supply and that the demand parameters derived from a fully specified simultaneous equation model strongly contradict the consensus view on the basis of his results suggesting infinitely price elastic demand for exports of manufactures from hong kong in this comment both of his claims and his results are disputed the author s conclusion concerning infinite price elasticity of demand for exports can be objected to on at least three grounds first in the context of his formulation it implies an abnormally large degree of money illusion on the part of the importers of manufactures second in using the inverse form of the demand function rather than the normal form he would necessarily produce a much larger estimate of price elasticity than otherwise using his approach one can quite easily produce an estimate of the marginal propensity to consume in excess of unity or an implausibly large estimate of the marginal propensity to save third infinite price elasticity is inferred from the statistical nonsignificance of the coefficient of export quantity in the inverse form of demand which represents the inverse of price elasticity however it can be argued that the estimate of the coefficient of export quantity is not statistically significant because of the high intercorrelation multicollinearity between quantity and income in view of the obvious upward bias involved in his approach to the estimation of price elasticity of export demand it is not only possible but also most probable that the adoption of his approach will also yield very high estimates of price elasticities of demand generally it is conceivable that one can produce a highly elastic demand for primary exports not only at individual country level but also at the world level using his approach if ldcs wrongly believe that demand for their primary exports is price elastic when in fact it is not unwarranted expansion of production could cause a significant fall in their export earnings with grave consequence for their economic development it is therefore most important to point out the weaknesses of his approach before it is widely adopted by other researchers keen to get high price elasticities of demand

risk aversion and expected utility theory a calibration theorem within the expected utility framework the only explanation for risk aversion is that the utility function for wealth is concave a person has lower marginal utility for additional wealth when she is wealthy than when she is poor this paper provides a theorem showing that expected utility theory is an utterly implausible explanation for appreciable risk aversion over modest stakes within expected utility theory for any concave utility function even very little risk aversion over modest stakes implies an absurd degree of risk aversion over large stakes illustrative calibrations are provided

hierarchical maximum likelihood parameter estimation for cumulative prospect theory improving the reliability of individual risk parameter estimates an individual s tolerance of risk can be quantified by using decision models with tuned parameters that maximally fit a set of risky choices the individual has made a goal of this model fitting procedure is to identify parameters that correspond to stable underlying risk preferences these preferences can be modeled as an individual difference indicating a particular decision maker s tastes and willingness to accept risk using hierarchical statistical methods we show significant improvements in the reliability of individual risk preference parameter estimates over other common methods for cumulative prospect theory this hierarchical procedure uses population level information in addition to an individual s choices to break ties or near ties in the fit quality for sets of possible risk preference parameters by breaking these statistical ties in a sensible way researchers can avoid overfitting choice data and thus more resiliently measure individual differences in people s risk preferences thi

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

real costs of nominal grade inflation new evidence from student course evaluations college gpas in the united states rose substantially between the 1960 s and the 2000 s over the same period study time declined by almost a half this paper uses a 12 quarter panel of course evaluations from the university of california san diego to discern whether a link between grades and effort investment holds up in a micro setting results indicate that average study time would be about 50 lower in a class in which the average expected grade was an a than in the same course taught by the same instructor in which students expected a c simultaneity suggests estimates are biased toward zero findings do not appear to be driven primarily by the individual student s expected grade but by the average expected grade of others in the class class specific characteristics that generate low expected grades appear to produce higher effort choices evidence that nominal changes in grades may lead to real changes in effort investment

incorporating a stochastic element into decision theories abstract recent papers by harless and camerer 1994 and hey and orme 1994 have employed two rather different models of errors in decision making under uncertainty the present paper develops a third approach and shows how different stochastic specifications of the same deterministic core theory may generate very different and sometimes surprising hypotheses

do high grading standards affect student performance abstract this paper explores the effects of high grading standards on student test performance in elementary school while high standards have been advocated by policy makers business groups and teacher unions very little is known about their effects on outcomes most of the existing research on standards is theoretical generally finding that standards have mixed effects on students however very little empirical work has to date been completed on this topic this paper provides the first empirical evidence on the effects of grading standards measured at the teacher level using an exceptionally rich set of data including every third fourth and fifth grader in a large school district over four years we match students test score gains and disciplinary problems to teacher level grading standards in models in which we control for student level fixed effects we find substantial evidence that higher grading standards benefit students and that the magnitudes of these effects depend on the match between the student and the classroom while dynamic selection and mean reversion complicate the estimated effects of grading standards they tend to lead to understated effects of standards

developments in non expected utility theory the hunt for a descriptive theory of choice under risk this article reviews recent developments in the economic theory of individual decision making under risk since the 1950s it has been known that individual choices violate the standard model of expected utility in predictable ways considerable research effort has now been devoted to the project of developing a superior descriptive model following an overview of non expected utility theories which distinguishes between conventional and non conventional approaches the paper seeks to assess these alternative models in terms of empirical success using laboratory and field data and theoretical usefulness the closing sections reflect on some new directions emerging in this literature

demand and supply factors in the determination of nie exports a simultaneous error correction model for hong kong this paper considers the issue of whether a small developing economy such as hong kong faces a perfectly elastic demand for its exports of manufactured goods we construct a simultaneous demand and supply system which is estimated using full information maximum likelihood methods and which allows us to clearly identify demand and supply factors in determining export volumes and prices our empirical findings differ from previous studies conducted with this data set in that they suggest that even a small dynamic newly industrialized economy such as hong kong may not face infinitely elastic demand for its manufactured goods we also advance some reasons to explain why the small country assumption may not be applicable in the case of most industrialized economies

demand elasticities in international trade are they really low the authors analyze the u s demand for bangladeshi imports for products restricted under the multifiber arrangement because bangladesh is only a small supplier of these products and latin american and asian countries can supply close substitutes the authors expected a high elasticity of demand for bangladeshi imports and they found consistently high estimates based on statistically significant coefficients their finding accords with trade theorists prejudice that small countries can essentially behave as price takers but conflicts with the empirical literature view that demand elasticities are low rarely exceeding 3 and generally between 1 and 2 the authors analysis differs from the existing literature in three ways they derive a set of estimation equations from an explicit utility maximization model and use the estimated parameters of the utility function to obtain the marshallian own price and cross price elasticities as well as the income elasticity of demand they take explicit account of u s imports from competitors of bangladesh relying directly on competitors prices and they use highly disaggregated data that make the unit value of exports a better proxy for price than using aggregated export data commonly used in this literature the authors outline their theoretical model for deriving their estimated equations in section 1 preliminarily determine who bangladesh s competitors are in section 2 and estimate the demand equation derived in section 1 and derive the price and income elasticities facing bangladesh in section 3

what do parents value in education an empirical investigation of parents revealed preferences for teachers this paper examines revealed preferences of parents for their children s education using parent requests for individual elementary school teachers and information on teacher attributes including principal reports of teacher characteristics that are typically unobservable on average parents strongly prefer teachers whom principals describe as good at promoting student satisfaction though they also value teacher ability to raise academic achievement these aggregate effects mask striking differences across schools families in higher poverty schools strongly value student achievement and appear indifferent to the principal s report of a teacher s ability to promote student satisfaction the results are reversed for families in wealthier schools

an index of loss aversion to a considerable extent risk aversion as it is commonly observed is caused by loss aversion several indexes of loss aversion have been proposed in the literature the one proposed in this paper leads to a clear decomposition of risk attitude into three distinct components basic utility probability weighting and loss aversion the index is independent of the unit of payment the main theorem shows how the indexes of different decision makers can be compared through observed choices

the impact of educational standards on the level and distribution of earnings the goal of this paper is to present the following finding an egalitarian policy maker might prefer higher standards than would a policy maker whose goal was to maximize the sum of earnings the result is based on the observation that if workers are differentiated with respect to ability an increase in educational standards will increase the earnings of both the most able and the least able workers the only workers whose earnings fall are those workers who after the increase fail to continue meeting the standard

a simple model of educational standards the author models standards for educational credentials such as high school diplomas standard setters maximize their conception of social welfare knowing that utility maximizing students choose whether to meet the standard the author shows that more egalitarian policymakers set lower standards the median voter would prefer higher standards under symmetric distributions and decentralization lowers standards among identical communities optimal standards do not necessarily fall with increased student preference for leisure deterioration of nonstudent inputs to education or increased student heterogeneity superseding binary credentials by perfect information increases average achievement and social welfare for plausible degrees of heterogeneity egalitarianism and pooling under decentralization