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Category Archives: 2014

Early Identification of Students at Risk for High School Dropout

By Derek Lindsey

For years, many have hoped to identify why high school students drop out. Typically, studies focus on factors identified in high school or middle school. By tracking a cohort of North Carolina students from third grade onward, we attempt to identify areas for intervention even earlier in order to prevent dropouts. Indeed, we find that variables that can be viewed as indicators of high risk for drop out in middle school are already measurably present as early as third grade. This suggests interventions can begin when students are still very young and when treatment is likely to be more effective.

Honors Thesis

Advisor: Thomas Nechyba | JEL Codes: I2, I20 | Tagged: Dropout, Education, Elementary School, Graduation, High School, Middle School

Understanding SME Finance: Determinants of Relationship Lending

By Sean Suk Hyun

Much of the existing literature in small and medium-sized enterprise (SME) finance surveys the impact of borrower and lender characteristics on firms’ credit availability, and it has already been established that there is a link between strong firm-bank relationship and higher level of credit availability. In this paper, I focus on what determines the strength of relationship, measured by length and exclusivity. In particular, I was able to build an original metric to gauge the strength of relationship using the inverse value of the number of financial institution that a firm deals with. Using a set of regressions, I confirm the existing theories that size of the firm and type of ownership matters. Small firms and sole proprietorships tend to have longer and more exclusive relationships, which implies their reliance on relationship lending. Firm owner characteristics are shown to be somewhat important, in that it serves as proxies for a given firm’s creditworthiness.

Honors Thesis

Advisor: Grace Kim, Michelle Connolly | JEL Codes: G02, G21, G30, L14 | Tagged: Asymmetrical information, Credit Rationing, Relationship Lending, SME Finance

The Impact of Micro-Banking on Health: Evidence from Self-Help Group Involvement and Child Nutrition

By Madeline Mckelway

Low income is only one nancial problem that poor families in developing countries face; impoverished households must also face irregularity of their low incomes. Self-help groups (SHGs) can enhance consumption stability by relaxing savings and credit constraints. In this study, I investigate the extent to which SHGs improve a particular dimension of household wellbeing: child nutrition. I analyze households aliated with the SHGs started by the People’s Education and Development Organization (P.E.D.O.) in rural Rajasthan, India. Children who had greater levels of exposure to household SHG membership at a young age have healthier anthropometric statuses than their siblings who had relatively less. This relationship does not appear to be driven by events coinciding with SHG involvement or by the tendency for certain children, who were also exposed to SHGs, to receive better nutrition than their siblings. These endings suggest that SHGs could improve child nutrition.

Honors Thesis


Advisor: Erica Field, Michelle Connolly | JEL Codes: O1, O12, O15, O16, O22 | Tagged: Microeconomic Analyses of Economic Development; Human Resources for Economic Development; Financial Markets in Economic Development; Project Analysis

Optimal Lineups in Penalty Kick Shootouts: An Empirical and Theoretical Investigation

By Lucas Hubbard

The purpose of this paper is to determine how teams should order their lineups in a five-man penalty kick shootout. We begin with a theoretical investigation of how comparative advantages for certain players in stressful situations will create clear, optimal lineup strategies for managers to emulate. Then, we analyze the performance of shooters in all professional men’s international shootouts thus far. We observe a number of factors that affect the player’s success rate—most notably, shooting in a high-pressure situation, shooting in a World Cup, and shooting against a more experienced goalkeeper all negatively impact the player’s success rate. Interestingly, we see a diminishing effect of the adverse response to high-pressure as the shooters are more experienced: inexperienced players suffer a statistically significant adverse response, while average and experienced players show no adverse response to high-pressure. We conclude with a simulation based on the empirical values that suggests teams should place their worst high-stress players (their inexperienced players) in the earlier shootout slots, as those are guaranteed to be of a low-stress variety. Conversely, players who perform relatively well under high-stress should be placed in slots 3-5, which are more likely to be of the high-stress variety. We observe the proportion of shootouts that end after a certain number of kicks, and we conclude that if coaches are able to identify their best high-stress kickers, the first team’s best kicker should kick in either round 4 or 5, while the second team’s best kicker should kick in either round 3 or 4. Finally, we see that the structure of the shootout provides an inherent advantage to the first team to shoot in shorter shootouts and an inherent advantage to the second team in longer shootouts. We recommend the ABBA ordering strategy put forth by Palacios-Huerta as a way to prevent this systemic inequality.

View Thesis

Data Set

Advisor: Attila Ambrus, Kent Kimbrough | JEL Codes: C7, C79 | Tagged: Game Theory, Optimality, Penalty Kicks, Soccer

A Franchise Education: The Impact of High School Quality on the Operations of Quick Service Restaurant Franchises in Texas

By Joseph Yetter

While the franchise business model provides customers with a certain level of consistency, there is still considerable variation in service quality across locations. Among other factors, a franchise’s quality of human capital (i.e., its workers) contributes to the quality of its operations, one of the strongest determinants of its revenue. Assuming that low wage workers have minimal geographical mobility, this paper studies how worker education impacts operation scores at the Texas locations of a quick service restaurant franchise brand by studying local school quality. This analysis controls for internal and external operations influences, such as the franchisee, designated market area, retail location type, the location’s proximity to a highway, and per capita income of the area to isolate the effect of school quality on operations. Ultimately, this study finds that higher school quality ratings have a significant and positive impact on the operations of franchises, and that operations have a significant and positive impact on sales revenue. Decomposing operations scores, this study finds that school quality ratings primarily impact operations by reducing customer complaints.

Honors Thesis

Advisor: Michelle Connolly, Ryan Mcdevitt | JEL Codes: J24, L8, L83 | Tagged: Business Operations, Education Quality, Franchise, Worker Productiviity

What is the Effect of Regulatory Supervision on the Profitability and Outreach of Microfinance Institutions?

By Nikolaus Axmann

Regulatory supervision is an important part of the formal banking process. As microfinance institutions have developed and multiplied, they have become more closely regulated, which has allowed many of them to evolve into more traditional banks. But there are concerns over microfinance regulation, as complying with regulatory can be costly, particularly for smaller institutions. Using high-quality cross-sectional data from the Microfinance Information eXchange, I conduct ordinary least squares and instrumental variables regression of regulatory supervision on profitability and outreach of microfinance institutions. Controlling for the non-random assignment of regulation using instrumental variables, I find that regulation is correlated with higher average loan sizes and less lending to women, but increased profitability among for-profit microfinance institutions. The results are consistent with the hypothesis that for-profit microfinance institutions change their business model in response to regulation by cutting outreach to lending sectors that are generally more costly per dollar lent. In contrast, nonprofit microfinance institutions do not adjust loan sizes or reduce lending to women in
response to regulation, although their profitability does not increase either.

Honors Thesis

Data Set

Advisor: Edward Tower | JEL Codes: F6, F61, F63 | Tagged: Development, Microfinance, Regulation

The Impact of State and Local Government Spending on Charitable Giving in the United States

By Lynn Vandendriessche

This paper seeks to further understand how government spending impacts private giving to charitable organizations. It considers giving and spending in the United States in 2008 with a focus on government spending on education, welfare, healthcare, and hospitals. Government spending is looked at at the state and local levels. The results indicate that the impact of government spending depends not only on the category of spending, but also on the income level of the giver. Increased welfare spending is shown to cause incomplete crowding-out across all income groups. Results consistently show education spending to cause crowding-out as well. The impact of both healthcare and hospital spending is more ambiguous, with differing results for different government levels (state and local) and income brackets.

Honors Thesis

Advisor: Michelle Connolly, Peter Arcidiacon | JEL Codes: L3, L31, L38 | Tagged: Altruism/Philanthropy, and Education, Charitable Giving, Health, Non-profit Institutions, Welfare

The Impact of Suburbanization on Poverty Concentration: Using Transportation Networks to Predict the Spatial Distribution of Poverty

By Winston Riddick

The purpose of this paper is to investigate the determinants of concentrated poverty, a phenomenon where socioeconomically deprived groups are heavily concentrated in particular neighborhoods in a metropolitan area. Drawing on Land Use Theory and the Spatial Mismatch Hypothesis, I develop a theory that identifies suburbanization as a principal cause of poverty concentration. Using interstate highway expansion as a source of exogenous variation in suburbanization rates, I evaluate this relationship in 240 U.S. Metropolitan Statistical Areas (MSAs) from 1960-1990, with concentrated poverty measured at the tract level. Panel regressions with MSA Fixed Effects find a positive and significant relationship between highway expansion and increased poverty concentration under a variety of specifications, including alternative measures of highways and an instrumented measure of urban population decline.

Honors Thesis

Advisor: Charles Becker, Michelle Connolly | JEL Codes: I30, J61, R13, R40 | Tagged: Highways, Poverty Concentration, Spatial Mismatch, Suburbanization, Transportation Networks

Has Tort Reform Been Effective in Abating the Medical Malpractice Crisis? An Empirical Analysis from 1991-2012

By Raj Singh

This paper evaluates the impact of malpractice reforms on average malpractice payment awards, frequency of malpractice claims, and malpractice premiums for internists, surgeons, and OB/GYNS. We also empirically test the physician-induced demand (PID) hypothesis in the context of the medical malpractice environment. Our results suggest that caps on noneconomic damages and total damages as well as patient compensation funds are successful in reducing average payments, while damage caps and collateral source rule reform were found to lower malpractice claim incidence. When grouping claims by severity level, we find that noneconomic damage caps and patient compensation funds are more effective at reducing average payment with increasing severity level, while total damage caps induce the greatest reductions in payments for cases of medium severity. Also, non-economic damage caps were found to only significantly decrease the incidence of medium severity claims. With regards to malpractice premiums, we found that implementation of total damage caps as well as modification of joint-and-several liability were associated with lower premiums for all specialists. Finally, we evaluate the notion of ‘defensive medicine’ by studying whether higher malpractice premiums result in greater Medicare payments. Based on our model, increases of $10,000 in OB/GYN premiums are estimated to result in a 0.81% rise in total spending. Of the reforms studied, modification of joint-and-several liability had the most significant and consistent effects in reducing Medicare reimbursements for all categories of spending analyzed, and total damage caps were also estimated to effectively slow the growth of spending in specifications without premiums.

Honors Thesis

Data Set 1

Data Set 2

Advisor: Tracy Falba | JEL Codes: I1, I18, I19 | Tagged: Defensive Medicine, Medical Malpractice, Tort Reform

The Relationship between and Geographic Distribution of Breast Cancer Statistics: Diagnosis, Survival, and Mortality in Selected Areas in the United States, 1973-2004

By Timothy Rooney

Using breast cancer registry data from the United States and regression models controlling for race, marital status, and county-level variation, this research analyzes the connections between these statistics and the geographic variation of each of them. In doing so, it determines that stage of diagnosis has a significant impact on survival likelihood and the likelihood of death due to breast cancer. It also determines that survival reduces mortality likelihood. Additionally, it determines that stage of diagnosis, survival, and mortality all vary geographically, postulating that the reason for this variation is due to lifestyle variation and uneven medical talent distribution.

Honors Thesis

Advisor: Charles Becker, Michelle Connolly | JEL Codes: I1, I10, I19 | Tagged: Cancer, Diagnosis, Health, Mortality, Survival


Undergraduate Program Assistant
Matthew Eggleston

Director of the Honors Program
Michelle P. Connolly