Friday, May 4, 2012

Donohue and Levitt, Foote and Goetz

            I first read Donahue and Levitt’s article, which relates to argument that was presented in the chapter we read in Freakonomics last week. The begin by stating popular reasons that may have been responsible for crime rates in the 1990’s to decrease a noticeable amount. Then they say that it was the legal battle between Roe v. Wade and the courts decision to legalize abortion throughout the country. Unlike the chapter in Freakonomics, Donohue and Levitt offer a model that includes data they gathered over time, and they focus on abortion numbers as the main explanatory variable. What they concluded was that abortion is responsible for nearly 50% of the decrease in crime rate during the period they collected data during. Basically, Donohue and Levitt provided statistics and analyzed them to provide support for the chapter we read in Freakonomics.
            In Foote and Goetz’s article, they are responding and criticizing Donohue and Levitt’s article written about the relationship about abortion and crime rate. They criticize the model they use along with many other factors that they say skewed the results of Donohue and Levitt. Basically, Foote and Goetz make their own model and find that there is no statistical significance between abortion and crime rate.
            So we can conclude that depending on the model one uses it will give you two completely different results for something that is comparing the relationship between two of the same variables. It is interesting how different results one can compute by measuring them slightly different. Looking at these two articles gives us the impression that there are always two sides to the story.

Tuesday, May 1, 2012

Where Have All the Criminals Gone?

In chapter 4 of Freakonomics, “Where Have All the Criminals Gone?” Levitt and Dubner discuss the relationship between increased crime rates and legalizing abortion amongst different states. They explain that without the option to get an abortion it will result in “undesired” births. These “undesired” births are resulting in higher crimes rates because they believe that these children are more violent because of who their parents may be. When different states began legalizing abortion these states also saw criminal activity diminish, thus implying that these “undesired” children were violent.

This chapter was one of the more interesting chapters we have read this semester. I think this relationship is very interesting, although I do believe legalizing abortion would contribute to a decrease in crime rates, I think many other factors can contribute to decrease in crime rates. Depending on your political views and your stance on the legalization of abortion, you may or may not consider abortion an illegal crime. If you do consider abortion an illegal crime then the crime rate never went down.

So I really believe this chapter should be more focused on how some may view the legalization of abortion, and then dive into the relationship between crime rates and abortion.

Wednesday, April 11, 2012

Elevator Conversation

           The topic of skyrocketing gasoline prices seems to be making headlines all over the news these past few months. I am very interested in what or who is causing these record highs and recently I have been collecting empirical data pertaining to the factors that effect the direction of crude oil.
            Although most of the price of crude is due to speculation and futures markets, there are still other factors that contribute to price fluctuations. A few of these factors include the following: OPEC production levels, non-OPEC production levels and whether wars are being fought. The data I have collected obtains the production levels of OPEC and non-OPEC countries the last forty years as well as the historical nominal prices, prices adjusted to inflation and the GDP deflator measurement.
            What I am looking for is if the levels of production of non-OPEC compared to the levels of OPEC have a statistically significant effect on the price of crude oil. The results I have found are not surprising, I found that when non-OPEC production levels exceed a certain amount the price of oil has decreased.
            I’ve found this topic to be very interesting and I know there is a lot more I can do to get even better regression results.

Thursday, March 29, 2012

Pak Sudarno's Big Family

In chapter 5 of Poor Economics, the idea of population policy was brought forth. Basically, Banerjee and Duflo analyzed what factors determine desired or non-desired family size some developing countries such as, India, Columbia, China, Ethiopia, etc. All of these countries, at some point in time, have attempted to implement a population policy whether it is China’s draconian one-child policy, or India’s mandatory sterilization system in the late 1970’s.

As Banerjee and Duflo dive into the determinants of how many children poor families decide to have, it becomes apparent that contraception may not have as much of a role as one would think in determining family size.

It was clear there was much more than contraception, aspects such as social norms, family dynamics, religious values, and economic status. All of these aspects play a major role, not only in determining family size but also how they will treat each child.

The statistic that I would like to look into more and see how it affects maternal deaths each year would be how well an affect modern contraceptive has on saving mothers lives. I would assume if couples are using modern contraceptives then mothers are at a less risk of dying. The regression would look like this:

Maternal Deaths = a + b1 (Family Income) + b2 (# of Children) + b3 (Education of Mother) + b4 (Use Contraceptives) + e

The dummy variable would be whether or not the couple uses modern contraceptives, I would give an answer “yes=1 and no=0.” I would then analyze the t-statistic and coefficient corresponding to this dummy variable and make a conclusion about how much of an affect modern contraceptives actually have on preventing maternal deaths.

Friday, March 9, 2012

Does OPEC Matter?

I don't think I could have picked a better first article to read pertaining to my thesis other than Robert Kaufmann's "Does OPEC Matter? An Econometric Analysis of Oil Prices." Kaufmann uses the application of ordinary least squares (OLS) to test his hypothesis which is quite similar to mine: An econometric analysis indicates that there is a statistically significant relationship among real oil prices and OPEC production methods.
In this article, Kaufmann sets up an estimation model using a dependent variable, Price, and outcome variables which represent market conditions, such as capacity utilization by OPEC, quotas relating to OPEC production, OECD stocks of crude oil and an interesting variable labeled cheat. The cheat variable represents the amount of production by a particular OPEC member that exceeds there quota set by OPEC. Although Kaufmann's main focus in the article related to OPEC and the power they hold when determining oil prices, he did briefly elaborate on how non-OPEC members had an effect on the price of oil.
Before reading this article, I was uncertain if I would actually be able to find a substantial amount of research relating to my thesis. It seems as if most analysts and economists that conduct research on oil markets tend to focus on OPEC's tendencies rather than non-OPEC members. I believe this could affect my thesis because I may not find enough research relating to non-OPEC members.
Some aspects of this article I had not thought of before were comparing single countries of OPEC to the OPEC organization as a whole excluding the country I choose to use as the dependent variable. This could should possible dominance countries may have within the OPEC organization.
After reading this article and gaining much more knowledge in regards to my thesis, I am looking forward to reading more articles. It was exciting to come across an article that had so much relevancy to my research topic.

Kaufmann, Robert. 2004. "Does OPEC Matter? An Econometric Analysis of Oil Prices." The Energy Journal, Vol. 25, No. 4.

Thursday, March 1, 2012

Opec Levels Reach New Highs

The article in today's Wall Street Journal, "OPEC Feb Output Reaches New Highs" has much relevancy to my final paper topic. My paper is going to analyze the oil production levels of the 12 OPEC members and the non-OPEC oil producers and how their respective oil production levels affect the price of oil. The article explains how the 12 OPEC members in February produced a record high level of oil production since 2008, a little above 32 billion barrels a day. The reason for this massive increase in production is because of the current sanctions that have been imposed on Iran. Not only have sanctions been put in place but Iran has decided to cut supplies to France and the U.K. and threatens the rest of the European Union. Thankfully, the OPEC members, particularly in the Persian Gulf region aside from Iran, have pledged to make up any missing barrels OPEC may owe to those countries mentioned above.

So there is a reason why OPEC has increased oil production so significantly which may or may not play a role in oil prices. It will be interesting to see how the uncertainty with Iran's oil exportation will affect the oil markets.

In terms of my paper, I will have to take into account such variables as sanctions, oil embargoes, and supply cuts because these all affect oil production and oil prices. For example, during the Saudi oil embargo in the 1970's prices sky rocketed and the U.S. implemented certain days when people could fuel their cars depending on what letters and numbers their license plates ended with. There are plenty of different factors that I will need to respect when analyzing oil prices, not just the production levels of OPEC and non-OPEC members.

Friday, February 24, 2012

Top of the Class

In chapter 4 of Poor Economics, Banerjee and Duflo bring up the problem of increasing absentee numbers in schools among poverty stricken areas in the developing countries. There are two sides of the problem though, the demand side (where parents decide whether their children will attend school) and the supply side (the role governments play to provide a promising and efficient educational system). In terms of the demand side of attending school, the parents of children have the final say whether their children will attend, most parents don't see value in education and they would rather have their children at home working for them bringing in income. On the other side of the spectrum, the supply side is controlled by the governments of these respective countries, these educational systems rely on many different factors such as providing teachers that actually "want" to teach, resources (books and informational technology). Although, Banerjee and Duflo have seen improvements in attendance through certain practices involving the supply and demand sides of the educational systems, there is still a lot more that governments and families can do to make sure all children are receiving a proper education.

I googled "poverty and education" and came a across an article in the New York Times titled "Class Matters. Why Don't We Admit It?" There were many similarities between this article and the chapter we read in Poor Economics. Basically, the article brings up that children in the United States from lower level income families do substantially worse in school compared to their high level income counterparts. Also, policy makers are trying to fix this by implementing George W. Bush's No Child Left Behind, which strives to make schools more efficient by analyzing the performance of teachers through test scores their students receive.

Although there are many similarities between the article and the chapter, Banerjee and Duflo analyze many more different aspects of poverty stricken educational systems. They believe that parents have a big decision of whether or not their children go to school, while the article does not take into effect the component of attendance and parental supervision. A similarity was the government intervention that is occurring in both developing countries and the United States to make education systems more efficient. At least the leaders of this country sense there is a problem here... Something I found interesting that the article brought forth was the nutrition and health of students and how it may affect their performance in the classroom.

Overall, the message that is being presented is that children who's families are of the lower class or in poverty are either not performing well in school or they are not attending school, and there are many reasons for why this is true. Do you think that attendance in the United States among children who in live in poverty is as low as the attendance of children in developing countries?