Rental market for textbooks

Here's a story about Chegg.com, which rents textbooks: We Rent Movies, So Why Not Textbooks?

"Yet the Craigslist model didn’t work. When classes ended in the spring, sellers couldn’t find many buyers online and sold their used books to the college store, often for pennies on the dollar. By the time students migrated back to campus in the fall, willing online sellers were few and far between. "
...
"With demand for good deals on textbooks running high, Chegg’s success comes in large part from being able to address those inefficiencies. While Chegg primarily rents books, it is also essentially acting as a kind of “market maker,” gathering books from sellers at the end of a semester and renting — or sometimes selling — them to other students at the start of a new one. "

See also http://www.bookrenter.com/, http://www.bookswim.com/, http://www.campusbookrentals.com/...

"It's like fishing..." Indoor prostitution in Taiwan and Rhode Island

Taiwan has begun a process of legalizing prostitution : "Taiwan's cabinet will issue regulations within six months, when new regulations take effect, covering locations in Taiwan approved for prostitution."

"It's like fishing," Su said. "The activity may be legal, but in some places you can't do it."

"Taiwan outlawed prostitution 11 years ago, but older sections of the capital Taipei still teem with underground sex workers in bars and night clubs on the upper floors of high-rise buildings."

"Taiwan is the latest place to legalise prostitution. New Zealand allowed brothels to operate freely in 2003, when parliament narrowly voted to overturn 100-year-old sex laws. A court in Bangladesh decriminalized the trade in 2000, but for women only."

And in Rhode Island, things may be moving in the opposite direction.
The Providence Journal has a story about how indoor prostitution was decriminalized in Rhode Island (perhaps inadvertently, the story suggests) as part of legislation aimed at strengthening laws against public solicitation: Behind closed doors: How R.I. decriminalized prostitution. (HT: MR). The story goes on to describe ongoing attempts to reverse that:

"This year, as they have for the last three years, several state lawmakers are pushing to rewrite the 1980 law. A bill that passed the House earlier this month clearly states that anyone who engages in sex for money is guilty of a misdemeanor, punishable by up to six months in jail and a $1,000 fine. The bill is awaiting a hearing in the Senate Judiciary Committee. " (emphasis added)

Money is at the root of a lot of repugnance.

Getting what you measure: college rankings version

As the rankings of universities conducted by the magazine US News and World Reports have become more influential, there are a growing number of reports of the ways, fair and not so fair, that universities respond to what USNWR tries to measure.

Clemson University has been in the news in connection with their stated efforts to rise higher in the US News and World Report rankings of colleges.
They and their critics agree that they want to do this; the question is are they doing it in the right way for the right reasons.

Here's a critic who says no:Researcher Offers Unusually Candid Description of University's Effort to Rise in Rankings:
"Clemson University is run in an almost single-minded direction, with nearly all policies driven by how they will help the land-grant institution rise in U.S. News & World Report’s rankings, according to a university official whose candid comments stirred debate among conference-goers here on Tuesday."

and the reply:
Clemson Assails Allegations That It Manipulates 'U.S. News' Rankings
"Clemson University, stung by charges by one of its own researchers that it willfully manipulates the U.S. News & World Report rankings, fired back on Wednesday, saying the accusations are “outrageous” examples of “urban legends” that have surrounded the university’s campaign to reach the top 20 of public research universities.“The accusation that Clemson, its staff, and administrators have engaged in unethical conduct to achieve a higher ranking is untrue and unfairly disparages the sincere, unwavering, and effective efforts of faculty and staff to improve academic quality over the past 10 years,” reads a statement issued by the university’s chief spokeswoman, Catherine T. Sams. “While we have publicly stated our goal of a top-20 ranking, we have repeatedly stressed that we use the criteria as indicators of quality improvement and view a ranking as the byproduct, not the objective.” "

Here's a summary: Clemson Explains Its Approach to U.S. News Rankings

And here's a story about alleged simple mis-counting at USC's School of Engineering: More Rankings Rigging , and a summary reflecting the relation between what is measured and what is reported: Gaming the Rankings. Here's an illuminating paragraph:

"Any performance measure is ripe to be gamed. The percentage of alumni giving is a measure worth 5 percent of a ranking in U.S. News. A few years ago, Albion College made its own stir in the higher education rankings world when it increased its percentage of alumni making donations with the stroke of a pen. As The Wall Street Journal reported, the college recorded a $30 donation from a graduating senior as a $6 alumnus gift for the next five years. Clemson, in its systematic approach to raising its rank — “no indicator, no method, no process off limits to create improvement,” as Watt stated — solicited alumni donations in such a way as to increase their giving rate: Alumni were encouraged to give as little as $5 annually."

Note incidentally that there are different ways to try to rise in the rankings, and some may be strictly gaming (e.g. soliciting and/or reporting the same $30 contribution in a different way), while others (lowering the number of classes with more than 20 students) may have a positive effect by themselves. But whenever the goal is one thing, but what is or can be measured is another, there of course will be incentives to respond to what is being measured.

Medical tourism and medical data

An Op-Ed in the NY Times reports on the difficulty of evaluating how well foreign hospitals do compared to American hospitals: Overseas, Under the Knife . A big difficulty is that appropriate data aren't collected on medical outcomes:

"There is reason to think the quality of care at some foreign hospitals may be comparable to quality in the United States. More than 200 offshore hospitals have been accredited by the Joint Commission International, an arm of the organization that accredits American hospitals. Many employ English-speaking surgeons who trained at Western medical schools and teaching hospitals.
So should offshore surgery be welcomed as a modest way to make American health care more affordable? We can’t know until we can directly compare the outcomes with those of American surgery. To begin, we must adopt a uniform way for American hospitals and surgeons to report on the frequency of short-term surgical complications.
Medicare could do this by requiring that all participating hospitals and surgeons count pre-surgical risk factors and post-surgical complications during hospitalization and for 30 days afterward, when most short-term problems become evident. The system used for many years by Veterans Affairs hospitals to reduce surgical complications is the best option for this, since it is available to all American doctors through the American College of Surgeons. So far, however, only a small minority of surgeons participate in this or any other valid national system of reporting surgical outcomes.
Patients and their surgeons also need comparable measurements of long-term success. Medicare should lead by adopting Sweden’s method of monitoring hip joint replacement outcomes. It tracks, for example, a patient’s ability to walk without pain six years after surgery.
Finally, Medicare should invite accredited offshore hospitals and their affiliated doctors to participate in all of its comparative performance reporting systems. Beyond informing Americans contemplating treatment abroad, such comparisons would allow us to learn if our care is the world’s best — and to accelerate our improvement efforts if it is not. "

Agreeing on what data to collect, and collecting it, isn't easy. (And of course what data you collect can influence what outcomes you get in ways that aren't all desirable.) But the lack of outcome data is a weak link in American medicine, which makes it difficult to evaluate alternative practices and procedures. I see this in discussions about kidney exchange, and my guess is that this is a big problem in improving medicine and the medical marketplace generally.

Senate Judiciary Committee and College Football Playoffs

The United States Senate Committee on the Judiciary had the following item on its home page yesterday:
"Did You Know? The Senate Judiciary Committee conducted 104 hearings and business meetings in the 110th Congress, more than any other Senate Committee"

There is only one meeting so far on next week's calendar:
Tuesday 7/7/2009
Subcommittee on Antitrust, Competition Policy and Consumer Rights
"The Bowl Championship Series: Is it Fair and In Compliance with Antitrust Law? "

Here's the AP story: Senate to Hold Hearing on College Football's BCS
"The Senate plans to hold a hearing next week looking into antitrust issues surrounding the Bowl Championship Series. It's the second time this year that Congress is shining a light on the polarizing system college football uses to crown its national champion."
...
"Sen. Orrin Hatch of Utah, the subcommittee's top Republican and the lawmaker who sought the hearing, did not return telephone and e-mail messages left at his office Tuesday.
In an essay for Sports Illustrated being released Wednesday, Hatch wrote that the Sherman Antitrust Act prohibits contracts, combinations or conspiracies designed to reduce competition.
''I don't think a more accurate description of what the BCS does exists,'' Hatch wrote. He noted that six conferences get automatic bids to participate in series, while others do not. The system, he argued, ''intentionally and explicitly favors certain participants.''
...
Football fans in Hatch's state were furious that Utah was bypassed for the national championship despite going undefeated in the regular season. Hatch noted that President Barack Obama and others have called for the BCS to be replaced with a playoff system."
...
"David Frohnmayer, president of the University of Oregon and chairman of the BCS Presidential Oversight Committee, expressed a preference Tuesday for the current system, saying the proposals for a playoff system ''disrespect our academic calendars, and they utterly lack a business plan.'' "

College football bowls used to be an unravelled market, and, whatever its other flaws, the BCS system has largely eliminated that problem. While I'm rooting for the Judiciary Committee in their own competition to hold the most hearings, I hope that their efforts will not do too much harm to one of the main reasons we have colleges.

Chinese college admissions exams

Americans have the SATs, Chinese have the gao kao:
All-Nighter? For This Test, Some Chinese Cram All Year

"China may be changing at head-twirling speed, but the ritual of the gao kao (pronounced gow kow) remains as immutable as chopsticks. One Chinese saying compares the exam to a stampede of “a thousand soldiers and 10 horses across a single log bridge.”
The Chinese test is in some ways like the American SAT, except that it lasts more than twice as long. The nine-hour test is offered just once a year and is the sole determinant for admission to virtually all Chinese colleges and universities. About three in five students make the cut."

Many students who don't do well in one year study for an additional year and take the exam again:

"Mr. Liu calculated that his score leaped by more than 100 points over last year’s dismal performance. But he was still downcast, uncertain whether he would make the cutoff to apply to top-tier universities. The cutoff mark can vary by an applicant’s place of residence and ethnicity."

That last point is actually a very interesting feature of college admissions in China. As I understand it, the exam for the elite universities is the same exam everywhere, but it is administered and evaluated differently in different regions. Thus Peking University (whose name in English survived the change in the English spelling of the city to Beijing) sets a different admissions threshhold for different regions. I believe it also has a different quota of students from different regions, so that students from a given region compete only with each other for admission to PU (or Beida, as it is known in Mandarin).

Furthermore, different regions have different rules about how the exam is used in the application process. In some regions, students take the exam and learn their scores before deciding how to fill out a rank order list of applications (in which the first choice is a critical one). These students know how well they did on the exam compared to others in their region, so the only uncertainty is how many other students will apply to each top university, and hence where the exam cutoffs will be that will be needed to get in under quota.

In other regions, students make their applications after taking the exam, but before the results are announced, so they only have an estimate of how well they did compared to others. And in still other regions, students must decide on their applications before even taking the exam, so they only have information about how well they have performed on other measures compared to other students.

Thus, along with the ordinary difficulties of applying to university, different strategic decisions about how to deal with the application process face students in different regions.

Behavioral game theory on the MA Turnpike

A recent story in the Boston Globe sounds like a behavioral economics seminar on transaction costs: why are a third of the tolls on the Massachusetts Turnpike still paid (more slowly and expensively) in cash, rather than using the (now free) transponders?
Some still slow to make the move to Fast Lane: 1 in 3 tollpayers paying at booth
"The Massachusetts Turnpike Authority has made strides in signing people up to use Fast Lane, with 66 percent of tolls now paid electronically, up from 62 percent in January. But the 34 percent who use cash, and pay higher tolls at booths inside Greater Boston to do so, remain a bit of a mystery."
...
"The survey LeBovidge conducted found that the biggest hurdle to signing up more people used to be cost, accounting for about 75 percent of the abstainers. About 7 percent worried about handing personal data to the Turnpike Authority or having their movements tracked. Some remaining drivers - not reflected in the survey - come from out of state and might not have an E-Z Pass account usable in Massachusetts. Other commuters do not have a checking account or credit card.
...
"If they wait in cash lanes enough times, most technophobes get converted. Fast Lane usage at the Allston-Brighton booths rises to 86 percent during morning rush hour into Boston. Massive traffic jams also do the trick: The Easter backup helped drive signups to 45,905 in May, compared with 10,875 during the same month last year."

One reason this is an interesting problem is that it's not just about individual choice, there's an element of behavioral game theory in this kind of slow learning. Cash payers produce congestion--negative reinforcement--for other cash payers. When lines at the toll booths get really long, even the EZ Pass users have to wait on line to get to the toll booths. So slower payers provide a negative externality to everyone on the busiest days.

In a forthcoming paper in the QJE, Amy Finkelstein raises the possibility that those cash payers may also provide a small positive externality by being more politically sensitive to changes in the tolls: EZ-Tax: Tax Salience and Tax Rates.
"Abstract: This paper examines whether the salience of a tax system affects equilibrium tax rates. I analyze how tolls change after toll facilities adopt electronic toll collection (ETC); drivers are substantially less aware of tolls paid electronically. I estimate that, in steady state, tolls are 20 to 40 percent higher than they would have been without ETC. Consistent with a salience-based explanation for this toll increase, I find that under ETC, driving becomes less elastic with respect to the toll and toll setting becomes less sensitive to the electoral calendar. Alternative explanations appear unlikely to be able to explain the findings."

So the next time you are stuck on the Mass Pike behind a long line of drivers waiting to pay their tolls, try to remember that there may be a small benefit to having the toll be so salient.