Incentives and the Supply of Effective Charter Schools
Job Market Paper
Charter school funding is typically set by formulas that provide the same amount for all students regardless of advantage or need. In this paper, I present evidence that this policy skews the distribution of students served by charters towards low-cost populations. I develop and estimate an empirical model of charter school supply and competition to evaluate the effects of funding policies that aim to correct these incentives. To do this, I recover estimates of cost differentials across student populations by linking charter school effectiveness at raising student achievement with unique records of charter school expenditures gathered from Florida. I then leverage revealed preference with entering charter schools’ location choices in an entry game to uncover how charter schools respond to competitive and financial incentives. The results indicate that a cost-adjusted funding formula would significantly increase the share of charter schools serving disadvantaged students with little reduction in aggregate effectiveness.
Valuing School Choice: Using a Randomized Experiment to Validate Welfare Evaluation of Private School Vouchers
(with Peter Arcidiacono, Karthik Muralidharan, and Eun-young Shim)
Draft available on request
While parents and students value schools for many reasons, evaluation of school choice programs often focuses on impacts on student outcomes alone. In this paper, we pursue a unique research design to credibly identify the welfare benefits of private school vouchers. We first develop and estimate a model of school choice with credit constraints using rich control group data from a randomized controlled trial of private school vouchers in rural India. We then externally validate the estimates by simulating a voucher program in the control group to compare with the experimental outcomes. We find that accounting for credit constraints is important for accurately predicting voucher takeup and implies substantial welfare gains to recipients.
The Competitive Effects of Entry: Evidence from Supercenter Expansion
(with Peter Arcidiacono, Paul B. Ellickson, and Carl F. Mela)
Coupling weekly grocery transaction records with the exact location and opening date of entering Walmarts over an eleven year period, we examine how their entry affects prices and revenues at incumbent supermarkets. We find that Walmart Supercenter entry within one mile of an incumbent causes a sharp 16% drop in revenue, an effect that decays quickly with distance. Surprisingly, despite large cross store differences in prices of supermarkets by exposure to Walmart, our findings also indicate that Supercenter entry has no causal effect on incumbent prices. This lack of a price response is robust across many dimensions including, but not limited to, a lack of response for individual categories and brands within a category.
Work in Progress
School Boards and Student Segregation
(with Hugh Macartney)
This paper provides the first causal evidence about how elected local school boards affect student segregation across schools. The key identification challenge is that the composition of a school board is potentially correlated with characteristics of the district, such as the extent and nature of household sorting. We overcome this issue using a regression discontinuity design at the electoral contest level, exploiting quasi-random variation from narrowly-decided elections. Such an approach is made possible by a unique dataset, which combines matched information about North Carolina school board candidates (including vote shares and political affiliation) with time-varying district-level racial and economic segregation outcomes. Focusing on the political composition of school board members, two-stage least squares estimates reveal that (relative to their non-Democrat counterparts) Democrat board members decrease racial segregation across schools. These estimates significantly differ from their OLS counterparts, indicating that the latter are biased upward (understating the effects). Our findings suggest that school boards realize such reductions in segregation by shifting attendance zones, a novel measure of which we construct without the need for exact geocoded boundaries. We identify two associated knock-on effects in districts with high proportions of black students: the initial boundary adjustments are somewhat counteracted through additional neighborhood sorting and board actions to reduce segregation give rise to “white flight” out of the district.
The Welfare Implications of Targeted Television Advertising
(with Carl F. Mela and Andrew Sweeting)
New technologies, such as DVRs and digital TV, enhance the ability of advertisers to deliver content to only a targeted set of viewers. While the public policy debate has centered on privacy concerns, we consider the effects of targeting on outcomes and welfare in product markets, which are theoretically ambiguous. On the one hand, targeting may make it more profitable for firms to invest in advertising that segments the market, raising both prices and profits. On the other hand, targeting may result in increased competition for common marginal consumers, resulting in intensified prices and lowering profits. Targeting may also facilitate expansion and growth by smaller, niche competitors that would not find advertising otherwise profitable. We quantify these effects using an empirical model that is estimated using data on sales and both local and national advertising in the U.S. beer industry.
The Fiscal Externalities of Charter Schools: Evidence from North Carolina
(with Helen F. Ladd)
Teachers’ Unions, School Board Politics, and District Performance
(with Ying Shi)
The Empirical Economist’s Toolkit: From Models to Methods
(with Matthew T. Panhans)
Forthcoming, History of Political Economy
While historians of economics have noted the transition toward empirical work in economics since the 1970s, less understood is the shift toward “quasi-experimental” methods in applied microeconomics. Angrist and Pischke (2010) trumpet the wide application of these methods as a “credibility revolution” in econometrics that has finally provided persuasive answers to a diverse set of questions. Particularly influential in the applied areas of labor, education, public, and health economics, the methods shape the knowledge produced by economists and the expertise they possess. First documenting their growth bibliometrically, this paper aims to illuminate the origins, content, and contexts of quasi-experimental research designs, which seek natural experiments to justify causal inference. To highlight lines of continuity and discontinuity in the transition, the quasi-experimental program is situated in the historical context of the Cowles econometric framework and a case study from the economics of education is used to contrast the practical implementation of the approaches. Finally, significant historical contexts of the paradigm shift are explored, including the marketability of quasi-experimental methods and the 1980s crisis in econometrics.
Putting Dollars Before Scholars? Evidence from For-Profit Charter Schools in Florida
Economics of Education Review 58 (2017): 43-54
This paper compares for and non-profit management of charter schools in Florida using a unique dataset combining enrollment and student proficiency data with the annual independent financial audits filed by all charter schools. Comparisons reveal that independent for and nonprofit charter schools locate in similar markets and serve similar student bodies, whereas for-profits belonging to a network locate in lower income, denser, and more Hispanic areas. Bearing out the concerns of parents and policymakers, regression estimates indicate that, among independent charters, for-profits spend less per pupil on instruction and achieve lower student proficiency gains. By contrast, among charter schools belonging to a network, for-profits spend approximately 11% less per pupil, but expenses on student instruction are not being cut. The estimates, which control for differences across schools in student composition and other characteristics, imply that an equivalent level of per pupil expenses purchases about 0.03σ higher student proficiency at network for-profit charter schools.
Sorting Charles Tiebout
History of Political Economy 47, annual suppl. (2015): 199-226.
A substantial and diverse literature in economics traces its intellectual roots to Charles Tiebout’s 1956 article, “The Pure Theory of Local Expenditure.” Its present recognition—frequently attributed to originating the idea of “voting with your feet”—contrasts sharply with its obscurity during Tiebout’s academic career, which was tragically cut short by his passing in 1968. Penned as a qualification to Paul Samuelson’s “pure theory,” the article failed to influence the stabilization of postwar public good theory despite Tiebout’s engagement with key figures in its construction. Moreover, his death preceded the application of its central mechanism to public, urban, and environmental topics via hedonic, sorting, and computational general equilibrium models. Viewed in this way, the history of Tiebout’s article, and thereby the history of public economics, has remarkably little to do with Tiebout himself. In consequence, this article seeks to repersonalize and contextualize Tiebout’s scientific work. Professionally, Tiebout 1956 reflected its author’s lifelong interest in local economies and governance. The social and political context of urban sprawl and political fragmentation that accompanied the rapid growth of metropolitan areas, such as Chicago, Los Angeles, and Seattle, raised novel questions in local public finance for researchers before a knowledge community existed to credit their work. For Tiebout, it stimulated his collaboration with Vincent Ostrom and Robert Warren and later involvement in the interdisciplinary field of regional science.
`Money is a Sterile Thing’: Martin Luther on the Immorality of Usury Reconsidered
History of Political Economy 43, no. 4 (2011): 683-698.
Chapters and Edited Volumes
Slaves or Mercenaries? Milton Friedman and the Institution of the All-Volunteer Military in Milton Friedman: Contributions to Economics and Public Policy, eds. Robert Cord and J. Daniel Hammond. Oxford, UK: Oxford University Press, 2016: 499-522.
Chicago Price Theory, 3 vols.
Cheltenham, UK: Edward Elgar Publishing, 2013.
(edited with J. Daniel Hammond and Steven G. Medema)