Economics Honors Theses (2002-2007)

Tim Watts (2002, Getz) tested whether SUV drivers compensate for the safety of their vehicles by driving less safely, are involved in more accidents, but do not incur more fatalities because of the structure of their vehicles. He found that states with relatively more SUVs have fewer fatal accidents, which is consistent both with more accidents that cause fewer fatalities per accident in SUVs, but also consistent with fewer SUV accidents.

Frances Ann Caple (2003, Getz): In the model of a competitive market, if consumers are unhappy with a product, they don't buy it, and the firm disappears. In reality, people sometimes do something else -complain. Frances analyzed data on patient complaints at the VUMC. She discovered that controlling for demographic factors (age, race, etc.), complaint frequency is associated with more costly procedures.

Neeli Dinesh Gandhi (2003, McNamee): In her thesis, Neeli Gandhi took a close look at the performance of the stock market and the economy in the aftermath of September 11, and compared it with performance after Pearl Harbor - a comparison that many in the media made at the time. She finds that, in most respects, linking the two events together is more misleading than helpful - the economic situation was very different.

Michael Gleason (2003, Siegfried). Peer effects occur when students of different ability are mixed together. Measuring peer effects is difficult, because people usually pick their peers. Using randomly assigned freshman dorm roommates at Vanderbilt, Michael related GPAs of freshmen to characteristics of students and their roommates. He found that matching high ability students together generates positive effects, but otherwise peer effects tend to be small.

Peter McHenry (2003, Getz). Peter asked whether Nashville would benefit from a commuter rail system. Applying a careful cost-benefit analysis, he concluded that virtually no matter the assumptions, the net benefits from commuter rail in Nashville would be negative.

Karim Merchant (2003, Margo). In his thesis, Karim merged data on inequality across countries and on legal systems, with particular interest in the relationship of inequality with the choice of common law versus civil law. He found that common law countries offer the most scope for affecting levels of inequality, a finding that complements other research suggesting that common law countries have higher growth rates, on average, in the long run.

Joshua Morris (2003, Jiang). J.T. Morris asked how the internet affects the behavior of more "conventional" retailers of similar goods? Using economic theory, and he analyzed books and compact disks. He argues that responses might be to get bigger or offer complementary amenities (complementary to the good), and demonstrates that both responses characterize retail books sales but for various reasons, not CDs.

Conley Patton (2003, McNamee): Securing a mortgage was once difficult because providers of mortgages were local, and there were often geographic imbalances in the demand for and supply of mortgage finance. This changed with the creation of agencies like the GNMA, FNMA, and the Federal Home Loan Mortgage Association. It also created problems for investors trying to value mortgage backed securities. In his thesis, Conley explores various models that have been used to value these securities and finds, somewhat disturbingly, that the different models yield radically different results.

Morgan Weiner (2003, Siegfried): Politicians often argue that sports teams have a huge economic impact on local economies, and commission studies that, sure enough, show that. Now universities are joining the act, including Vanderbilt. In her thesis, Morgan critically appraises Vanderbilt's recent report on its economic impact, finding double-counting and the failure to recognize realistic counterfactual situations causes VU to overstate its impact (possibly by as much as 100 percent, depending on assumptions).

Yaroslav Alekseyev (2004, Daughety & Reinganum). Yaroslav analyzed the legal institution of whistleblowing; that is, when a private individual brings a lawsuit alleging that a private individual has defrauded the government. He developed a "sequential game" of this institution, which required, among many other things, specifying the strategies to be followed by the different players, as well as solving for the equilibrium. .

Amanda Boaz (2004, Schwartz). Amanda studied price data for auto auctions held in Tennessee. These data provide price information, as well as information about the characteristics of the automobile, and information as well on the seller, including measures of the seller's reputation. Among many other findings, she was able to show that reputation matters - sellers who were repeatedly in the market received higher prices for their automobiles.

Ashley Coleman (2004, Hutchinson). The most famous study of the slave economy of the pre-Civil War American South is Time on the Cross, by Fogel & Engerman. Their analysis of slave prices was based on a sample of transactions in New Orleans from 1820 to 1860. Ashley expanded the sample using a database of 50,000 slave prices covering all of Louisiana, and dating back to 1800. Her econometric analysis showed that many of Fogel and Engerman's findings are fragile; the structure of slave prices apparently differed across slave markets.

Patrick Foley (2004, Schwartz). Patrick studied a fundamental problem in auction design - should an auctioneer charge a percentage fee (perhaps with a sliding scale) or a fixed fee? Most auctions seems to have percentage fees, so one might suspect that such fees generate more revenue for the auctioneer. Foley developed a theoretical model of this problem and showed (using simulations) that, in fact, there were conditions under which the percentage fee dominated and others under which a fixed fee could dominate.

William Graff (2004, Anderson). William studied the determinants of labor market earnings in El Salvador. He shows that significant gender differences in wages exist, differences that do not appear related to gender differences in human capital. In a number of respects - e.g., low returns to labor market experience - the structure of earnings in El Salvador looks like what is observed in "transition" economies (countries that have undergone substantial changes in political and economic structure).

Elizabeth Mielke (2004, Crucini). Elizabeth studied the effect of business cycle downturns on financial crises for many countries over a long period, going as far back as 1880, including periods involving different international trade institutions (the gold standard vs. fixed exchange rates). Among other findings, she shows that, while the probability of a recession has remained about constant over time, that of a financial crisis has increased - but, the share of global output directly affected has declined over time. There appears to be no casual link between business cycle downturns and financial crises.

Julian Reif (2004, Schwartz). Julian's thesis is about a "linear contract auction," in which a principal - say Vanderbilt - invites bids for a contract - say providing restaurant services to students. The linearity involves the principal's cost - for example, does the principal just pay a fixed fee, or instead share costs. The twist in the thesis is the assumption that the opportunity cost of the party doing the bidding are unobservable to the principal. Thus, should the principal share costs completely, not at all, or partially? Using both theory and simulation, Julian derives the optimal sharing rate.

Denise Schnapp (2004, Getz). Denise analyzed the frequency of cesarean sections. Nearly a quarter of births in the U. S. are cesarean, a rate exceeding that recommended by the World Health Organization. Using data for approximately 5800 hospitals, Denise showed that hospital characteristics - for example, size or ownership structure - had little effect on the cesarean rate, with one exception; hospitals with a "women's center" had higher rates, possibly because such hospitals were seen as more experienced with high risk pregnancies.

Natasha Adams (2005, Jeremy Atack). Using data on individual workers for Rhode Island and California in the 1890s, Natasha examined the extent of wage discrimination against immigrants, with a specific focus on the Irish. She finds some evidence of discrimination in Rhode Island but none in California, consistent with the hypothesis that the labor-scarce "frontier" - which California certainly was at the time - was a less discriminatory environment than the long-settled East Coast.

Ashley Cargill (2005, Andrew Hughes-Hallett). Like most things in economics, there are benefits and costs to joining a monetary union and there is likely to be an optimal size of such a union. In her thesis, Ashley considered these costs and benefits in the context of the "Eurozone" - the monetary union comprising the euro. She concluded that the EMU was probably too big but, given the small chance that countries would be excluded after joining, policies were needed to either increase the marginal benefits or reduce the costs associated with membership.

Ryan Holt (2005, Malcolm Getz). Many consumers routinely use file-servers and download music, often for free, upsetting the economics of the recording industry. Ryan collected data on the quantity of file sharing and several potential determinants of it. He found that the threat of lawsuits did have a negative effect (although quite small), as was the threat of contracting a computer virus. Keeping the economy growing reduces file sharing; when people have free time because they are unemployed, file sharing increases.

Heather Lowman (2005, Robert Margo). In her thesis Heather analyzed differences in retirement behavior across industries using the so-called Health and Retirement Survey. She found that industries that traditionally had defined benefit pension plans have, in recent decades, reduced employment and pension coverage and consequently, this will delay retirement of workers in these industries, other factors held constant.

Jonathan Thornhill (2005, John Siegfried). In his thesis, Jonathan applied game theory to decision-making in football. Modeling football as a simultaneous game, he asks whether teams follow an optimal mix of passing and running. His definition of "success" is achieving a first down. Using play-by-play data from the 2003 season, Jonathanl found that most teams were mixing pass and run optimally. Surprisingly, however, he also found that teams that did follow an optimal mix did not necessarily win more frequently.

Julia Warren (2005, Robert Margo). Richard Easterlin argued in 1980 that a larger than average birth cohort will experience lower incomes than its parents and will reduce its relative fertility; a smaller than average cohort will do better in terms of income than its parents, and have higher fertility. Updating and reanalyzing Easterlin's data, Julia finds little evidence to support Easterlin's arguments, possibly because of change in labor demand wrought by technological change and because rising female labor force participation implies different marital and fertility patterns.

Anne Arlinghaus (2006, Buckles) asked if education has an (external) financial payoff to people other than those receiving it, because more highly educated workers give ideas to many people about how to increase productivity. Using the Brazilian Census, she found that everyone in states with higher average education levels seems to earn more, including those who themselves have more education. The effect on the highly educated themselves is important because the supply effect of more educated workers is expected to lower rather than raise their earnings. Finding that their earnings rise indicates a spillover effect sufficient to overpower the earnings-depressing supply effect.

Frank Corrigan (2006, Siegfried) tested the "arson for profit" theory, that the incentive to burn down a structure rises as its insured value exceeds its actual value, which may occur during a recession. Earlier research using unemployment rates to proxy for housing values found no support for the idea. Frank recognized that housing values do not always decline when unemployment rises, as occurred in 2001. He found the same absence of a relationship when he replicated earlier work correlating arson to the unemployment rate using newer data. But he did find a positive relationship between arson and a housing price index, suggesting that at least some arsons are caused by economic incentives.

Patrick Hely (2006, Siegfried) observed that women in the 1950s did not earn college sheepskin effects. Using data on high school graduates from the 1980s, he showed that sheepskin effects had developed for women, perhaps reflecting the signals "dropping out" sends to employers. In the 1950s many women dropped out of college to get married and/or have children, i.e. for "good reasons." Patrick shows that average age of first marriage of women and age of mother at first birth rose substantially after 1960, so that by 1980 women drop outs could be perceived like male dropouts have long been viewed-as likely to have work undesirable work habits, and so employers pay them less.

Jocelyn Lin (2006, Ahlin) asks if macroeconomic conditions affect the financial health of microcredit institutions. She finds that Gross National Product growth and foreign direct investment (FDI) help microcredit organizations. This is not obvious, because FDI might create economic opportunities that are alternatives to microcredit finance. Contrary to the hypothesis that microcredit organizations are insulated from their formal economies because they make loans for activities that are largely in the underground economy, Jocelyn finds that microcredit organizations are connected to the formal economy.

Burcu Basaran (2007, Crucini) studied the determinants of market prices of a single good sold in two countries in the presence of tariffs and fluctuations in supply and demand. Her model predicts a rising relative price variance across countries as market turbulence rises, up to the point of arbitrage. Using simulations, she finds that prior empirical research relating relative price variation to the distance between markets and the presence of a national border may understate border widths in the presence of market fluctuations.

Chris Handy (2007, James Foster) explores the idea of externalities in Amartya Sen's capability approach, in which individual well-being is not determined by income, or the things one consumes, but rather by the freedom to achieve certain outcomes, doings, and beings, whether or not they are actually achieved. Chris introduces external capabilities-direct relationships with other people in helping one achieve a capability, especially through information technology. Proximate literacy is a good example-language skills of another family member may help during foreign travel, for example.

Judith Ricks (2007, Siegfried) asked why there are more women undergraduate economics majors at some colleges than others. Her key question is whether the prevalence or absence of women economics faculty affects female students' decisions to major in economics. Using data from 200 colleges, Judy finds more women economics majors at institutions with more female economics faculty, after controlling for the proportion of female students in the overall student body.

Jamin Speer (2007, Buckles) hypothesized that teacher's unions agree to lower salary scales for rookies than for experienced members, leading him to ask if the existence of a teachers' union, its prevalence, and its strike authority affect teachers' salaries. Using a national data set, he finds that, on average, teachers in unions earn about 11 percent more than non-union teachers. Early-career teachers appear to benefit more from the presence of a teachers' union than do experienced teachers. However, in right-to-strike states experienced teachers' salaries increase more than the salaries of starting teachers.

Josh Taylor (2007, Hutchinson) asked what speeds up or slows down the diffusion of agricultural innovations, including GPS mapping of fields, the analysis of how crop yields vary within fields, and soil sampling with GPS. He discovered that areas in the Midwest served by large independent or cooperative farm equipment dealers had access to these innovations earlier. He also learned that higher interest rates slow adoption of more expensive innovations.

Brian Waters (2007, Ahlin) explored different liability schemes for loans by microfinance organizations in developing countries to entrepreneurs so poor they cannot put up collateral. This makes borrowing more attractive to risky than to safe borrowers, and thus less profitable to lenders because risky borrowers default more often. Brian asks whether contracts that penalize failed borrowers when they try to borrow again can overcome this problem. He shows that such lending schemes may allow a bank to eliminate enough risky borrowers in period two so as to lower the break-even interest rate sufficiently to include enough safe borrowers in the borrowing pool over both periods so that social welfare rises.

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