University admissions in the UK: admissions formulae

I recently wrote about University admissions in the UK , from the point of view of the centralized process by which applications are made, university decisions are communicated, and student responses are collected. Universities' admissions decisions are decentralized, however; each university makes its own. A story in the Times of London, with accompanying links to documents obtained through Britain's Freedom of Information Act, gives an unusually detailed look at how top universities are making those decisions: Top schools boycott ‘biased’ Durham--The leading university's entry system handicaps high performers.

The article discusses first Durham University, and then Cambridge and Oxford. Some controversy attaches to these universities' weighted ranking systems that now give extra points to students who come from low achieving schools.

Digital Economy Symposium at HBS

On June 19 there will be a symposium on the Digital Economy at HBS; the program is at the link.

The organizers are John Deighton, Karim Lakhani, and Misiek Piskorski.

I plan to talk about "Computationally Assisted Markets."

Fertility and religion

The Bible encourages reproduction, but puts bounds on sexuality, and so religious couples seeking treatment for infertility need to navigate carefully. For orthodox Jews, the Puah Institute (named after one of the two Hebrew midwives in the story of the birth of Moses) helps with this navigation. Here's a story about rabbinical supervision of medical fertility treatments involving in vitro fertilization: How to make a kosher baby.

Some of the particular issues that arise with in vitro fertilization involve how to be sure, in a legal sense, who the parents are. (This is presumably also one of the reasons behind the restriction of sex to marriage in so many cultures, when sex was the only reproductive option.)

The problem of how to integrate new technological and commercial possibilities with ancient customs, rules, and practices is very clear when those are religious in nature. But similar problems also present themselves in secular society, in dealing e.g. with issues like surrogacy, or compensation for sperm and egg donors in ways that navigate around repugnance.

In only slightly related news (but still on the subject of being fruitful, and making sure your children have the right parents), the cost of arranged marriages is going up among Israel's most orthodox Jews: Haredi matchmaking rates skyrocketing

Protecting the commons with 'altruistic punishment': scam baiting

Ernst Fehr and his students and colleagues have conducted a broad inquiry into the idea that many public goods may be maintained in part by a widely held motivation to punish transgressors, even when such punishment is costly. It's an idea that has engaged evolutionary psychologists and anthropologists as well, and has generated some controversy.

An example of altruistic punishment in practice is the internet sport of scam baiting: Baiting Nigerian scammers for fun (not so much for profit).
"When your hobby is baiting 419 scammers (also known as Nigerian scammers or advance-fee fraudsters), a death threat isn't cause for concern—it's a trophy worth bragging about to your friends.
Scam baiters are the vigilante enforcers who come together to waste hours, weeks, or months of 419 scammers' lives for nothing more than the satisfaction of knowing that they are distracting them from real victims. Though the world of 419 scams has existed since long before the Internet, people continue to fall for scammers in droves—certainly, scammers are making millions of dollars every year by promising money, goods, and romance that they never deliver on. That's part of why scam baiting has actually become a somewhat popular pastime online, with thousands of users flocking to scam baiting forums to share stories and ideas on how to string along more scammers. And hey, why not? Most of us end up spending too much time screwing around on the Internet anyway—these folks just use that time to make scammers miserable."

If you want to play (the next time you get an email offering to transfer millions of dollars to your account*), one of the central sites seems to be 419Eater.com.

*For those of you who never look in your junk mail folder, here's a good example from mine:
"Sir / Madam,
I am Barrister Adamu Azeez, an attorney to late Richard Lim a foreigner who is an Engineer with Nigerian National Petroleum Corporation (NNPC) here in Nigeria. Late Mr. Richard Lim has an account with United Bank for Africa Plc, Nigeria.
I received a memo early this year from the Bank Remittance Department for an interview about (US$25.500,000.00) (TWENTY FIVE MILLION FIVE HUNDRED THOUSAND UNITED STATES DOLLARS ONLY) that belongs to my client Late Mr. Richard Lim ,the bank informed me on their policy to freeze the account of Late Richard Lim, I am in a position to redirect the (US$25.500,000.00) to any foreigner's account any where because they was no Next of Kin in his entire file within the bank and his account has been dormant for years which is against the policy of the Bank.
I am contacting you because of the need to involve a foreigner as the foreign beneficiary to that fund and also to stand as the Next of Kin to the deceased. I have resolved to share the money in this ratio.
(1) 65% for me.
(2) 30% for you.
(3) 5% for the Remittance Manager in the bank who has agreed to guide us for the success of our objectives.
(4) 5% for any expenses both party might incur during the processing of this transaction.

I will need your full name and address including telephone and fax number for the internal processing of the fund transfer and the internal processing of the required documents to back you up for the claim of the fund in receipt of all the required information from you which was given above. I will give you further details on the entire process when I receive your positive response."

HT: jeff at Cheap Talk

Same sex marriage in New Hampshire

Once again, an ancient repugnance is annulled by legislators, not just judges: New Hampshire Legalizes Same-Sex Marriage .
"The New Hampshire legislature approved revisions to a same-sex marriage bill on Wednesday, and Gov. John Lynch promptly signed the legislation, making the state the sixth to let gay couples wed. "

Real estate brokers and the internet

Now that many houses for sale can be viewed on the internet, it is entirely possible to conduct a search for a house without the assistance of a real estate broker. But a peculiarity of the real estate market is that a buyer who does not use a broker may not reduce the fees paid in the transaction. A typical seller's contract with the broker who helps put the house on the market (the "originating broker") is for 6% of the selling price. If the buyer is accompanied by an agent, this fee is split between the two. If the buyer comes without an agent, the 6% is paid entirely to the originating broker.

An internet brokerage firm has seen this as an opportunity. Redfin.com offers to represent buyers and refund 50% of Redfin's half of the fee set by the originating broker and seller. So, if the fee is the conventional 6% of the sales price, Redfin as the buyer's broker would get 3% and refund 1.5%. That is, if you are on the verge of buying a house for a million dollars without a broker, but instead close the deal through Redfin, they will give you $15,000. That's not a bad reason to have an agent.

Obviously this is inefficient from the point of view of the buyer, seller, and originating broker (since if they could negotiate efficiently they could divide among themselves the 15K that Redfin keeps). But the final moments of the negotiations are tense ones, in which the reservation values of all three parties are unknown, so this may not be the kind of 3-way negotiations in which we should expect efficiency. So Redfin may have a good business.

I keep expecting the real estate market to undergo some fundamental change, and maybe this is a sign of pressure building.

HT: Michael Schwarz

p.s. for completeness, I note that Redfin also offers discounted sell-side services, part of which come with a fee that is not contingent on whether or not a sale results.

Market for bodyguards

A big cost of having full time bodyguards is overtime pay, particularly for those who travel a lot, or have an active nightlife. So, in an economy move, Scotland Yard is increasing the number of protection officers assigned to protect the British Royals, whose younger members apparently need several shifts: Royal protection unit boosted by 150 extra armed protection officers .
"Metropolitan Police protection officers for the Royal family, diplomats and politicians work up to 70 hours a week, particularly on foreign trips, and receive overtime payments of up to £30,000 a year.
A decision to boost the 400-strong team by up to 150 officers is the result of a review that has also raised questions about the costs of looking after junior members of the Royal family."

Market for poets

The market for poets is of course not the same as the market for poetry, and a recent NY Times article looks at how poets fit into academia, as professors of poetry: Poets, Academia: A Couplet in Conflict.
The article discusses the notion that poets might be expected to be more drunken and seductive than, say, critics. But in other respects, the intersection of poetry and academia is a lot like in many other fields, in which scholars not only do scholarship, but teach.

That being said, the balance between scholarship and teaching, like the balance between discovery and stewardship, and between the ivory tower and the open marketplace, is quite different in different disciplines. But, in each discipline, the various roles that universities play in our society involve finding such balances.

I can't tell how much the non-academic market for poets and poetry has been changed since the endowment in 2003 of the Poetry Foundation (what rhymes with a hundred million dollars?). But here's a 2006 article in the Globe: Poets, Inc., which notes about Poetry magazine that "The magazine's efforts to engage a broader audience seem to be working. When Wiman took over Poetry in October 2003, the magazine's circulation was 11,000. Today it stands at roughly 29,000."

One thing to admire about the poetry biz is that there's a technical term for a bad poet: poetaster (rhymes with "do it faster").

(Contest: what should be the equivalent word for a bad economist? Econo... misser? ...messer?)

Chicago parking: private metering, public/private enforcement

The City of Chicago recently sold the right to manage its parking meters for the next 75 years to a private company, for a payment of $1.15 billion. The city retains the right to make parking laws and enforce them, although some aspects of enforcement are now shared. Not surprisingly, there's some trouble in the Windy City: Long a Driver’s Curse, Chicago Parking Gets Worse .

Not only have meter rates gone up, enforcement seems to have become more aggressive. Aside from the fact that Chicago looks to parking fines for revenue in tough economic times, there appear to be market design reasons for this.

Here is the agreement between the city and the contractor. Section 3.2e on page 40 reveals that the contractor as well as the city may issue tickets to illegally parked cars at meters.

So now there are two motivations for issuing tickets; the city issues them to raise revenue from parking fines and to enforce the parking laws, and the contractor issues them to increase meter revenue by discouraging people from parking without paying or parking after the payment has expired.

The city can raise revenues from fines by aggressively enforcing laws, e.g. about how many inches you may park from the curb. The contractor can raise revenues by ticketing cars promptly after meters expire. (Both the city and the contractor have an interest in enforcing the laws that say you must park between the lines.)

Some problems with getting new meters (which accept credit cards) to work properly have compounded the angst.

What to do? Carry lots of quarters when you drive in Chicago, at least until things settle down.

Harvard's "Z-list," waitlist admission with a difference

Even Harvard gives favorable attention to legacies (children of alums), you are no doubt shocked to learn. But, right around this time of year, as offers are made off the waiting list, some of those alumni children, and others with certain special late-season Harvard offers, are being given a potentially hard choice: The Back Door to the Yard Z-list: A legacy-heavy special admissions program .

The Z list students are admitted after a year delay, on the unusual condition that they don't attend college anywhere else in the intervening year. The Crimson story (from several years ago) described the program, and found that it included a substantial proportion of legacy students. (emphasis added):

"This group of students, known within Byerly Hall as the “Z-list,” are plucked off the waitlist any time from May to August—after they have accepted offers of admission at other universities—and informed that if they are willing to take a year off, they can enroll at Harvard the following September.Harvard admissions officers say they choose to “Z” students—it’s a verb—when there is a consensus that the College cannot bear to reject them but there is simply no bed available for them immediately after they graduate high school.“There’s no formula to this and there’s not much in common [between Z-list students],” says Director of Admissions Marlyn McGrath Lewis ’70-’73. “It makes us feel we made some effort to get them here.”But if you talk to enough of these students whom the admissions office makes a special effort to bring to Cambridge, you’ll find they do have something in common: Their parents went to Harvard."
...
"Other top colleges have special admissions programs in which applicants are asked to take time off or enroll elsewhere and then transfer, but no other Ivy requires students to take a year off and gets them to come in such high proportions—a testament to the College’s perennial superiority in admissions.And if a year off makes students more mature and better able to contribute to the College, then the Z-list allows Harvard to placate powerful parents without diluting the quality of its class."
...
"“A very high percentage are alumni cases,” agrees Susan G. Case, a college counselor at Milton Academy, which in some years has sent Harvard a quarter of the Z-list all by itself. “There isn’t necessarily an academic pattern, but it’s usually institutional needs. That’s a phrase they use internally.”"

Legacy admissions in public schools

California leads the way again: here's some school choice news from LA. 'Legacy' admissions OK'd in public grade schools, Calif. weighs pros, cons of alumni preference policy.

"Emulating a controversial practice at many colleges, two high-achieving public school districts in California are giving preference to the children of alumni.

"The Beverly Hills Unified School District and the Santa Monica-Malibu Unified School District have adopted legacy admissions policies for children of former students who live outside their enrollment boundaries.
The policies appear to be the first in the nation at public schools, education observers say.
The programs vary slightly, but leaders of both districts say they hope to raise money by forging closer ties with alumni who may be priced out of their hometowns as well as with grandparents who still live there.
In each district, nonresident legacy students will make up a tiny percentage of the student population, officials said.
...
Many universities and colleges have long offered preferences to the children, grandchildren, and siblings of alumni, accepting them at greater rates than applicants overall, sometimes with lower grades and SAT scores.
Universities' arguments for legacy admissions - to nurture connections with alumni and their checkbooks - have been upheld as constitutional.
But the policies can cause campus controversy, leading some schools, including the University of California in 1998, to vote to abolish them.
...
Beverly Hills adopted its legacy policy on a 3-2 vote last spring, allowing the children of anyone who attended city schools at least four years and whose grandparents have lived in the city for at least a decade to apply for permits. Eleven students, among 5,100 enrolled in district schools, attend school under the program.
Fenton said he proposed the idea to reconnect the district with grandparents who live within its borders and no longer have a direct stake in the city's schools yet are asked to vote on school measures, such as a $334-million facilities bond passed in November."
...
"To round out classes and maximize state funding, the 12,000-student Santa Monica-Malibu district has long offered permits to the children of district, city, and community college employees, siblings of current students, and others who moved away.
After those, it also has given permits to some nonresident students without connections to the district.
But the board voted unanimously in April to give alumni children priority over this last category of students, starting next school year.
...
"Critics are skeptical.
"It would be more efficient from a fund-raising standpoint to auction off education slots on eBay than to create a legacy preference," said Michael Dannenberg, director of education policy at the nonpartisan New America Foundation."

Opposite of repugnance: Protected transactions

I've been thinking lately about transactions that are the opposite of repugnant, i.e. transactions that, as a society, we often seek to promote, for reasons other than efficiency or pure political expediency.

In yesterday's post I mentioned monogamous marriage between a man and a woman, which in many countries and U.S. states is promoted over other forms of marriage (such as polygamy or same sex marriage).

Home ownership in the US is an obvious one, in this post-housing-bubble financial crisis, in which there have been Federal bailouts of the various Government Sponsored Entities like Fanny Mae and Freddy Mac, set up to promote home ownership.

Food production by small farmers, not only in the US, but also in Europe and Japan: we protect this by subsidies, price supports, government supported crop insurance programs, etc.

Fishing by small fishing boats: if we were only interested in protecting fish to keep fisheries sustainable, we might regulate fisheries by imposing seasonal limits on how much could be caught. But in many cases we also set daily limits (e.g. some fishermen on Cape Cod are limited to catch no more than 400lbs of scallops a day). This makes large, factory fishing uneconomical, and protects small local fishermen.

The right to purchase guns probably falls into this category in the U.S.

Of course, as with repugnant transactions, protected transactions may involve a lot of complications, like providing public goods and protecting rights. But it may be that to better understand which kinds of transactions may come to be regarded as repugnant, it will help to understand which kinds of transactions are sometimes protected.

Update: looking at the comments, commuting alone in a car seems worth including on the list of protected transactions in the U.S. (And thank you to Dubner at Freakonomics for his generous plug of this blog...)

Airport slot auctions in the Washington Post

Today's Washington Post has an editorial regretting the obstacles thrown up to auctioning airport slots, and in favor of good market design: Airport Slot Auctions--A good idea to relieve air traffic congestion is snuffed out.

HT: Scott Kominers

Miscellaneous repugnant transactions

Germany to ban paintball
"The German government is planning to ban paintball and laser shooting games in reaction to the recent school massacre in which 15 people died.
Under legislation agreed by the ruling coalition of the chancellor, Angela ­Merkel, using air rifles to shoot paint-filled pellets at opponents is likely to be made illegal, and would be punishable with fines of up to €5,000 " (HT Muriel Niederle)

Over at Knowledge Problem: Price gouging: Is it wrong? Should it be against the law?

At MR, Tyler Cowen reports:"Love Land, a sex theme park set to open this October in China won't have the chance to lose it's virginity. Chinese bureaucrats ordered the park destroyed after details of the park's featured attractions were leaked.
The story is here. The rest of the article relates:
The park was to have giant-sized reproductions of male and female anatomy, and offered lessons in safe sex and the proper use of condoms. There was also an exhibition about the history of sex, as well as workshops offering sex techniques.
The entrance to park featured a giant pair of women's legs clad only in a red thong. Those legs are now closed forever. Officials would only say that the concept of the park was vulgar, and deemed unnecessary. Bulldozers and wrecking ball were seen destroying the exhibits as onlookers tried to get a peak.
China considers the topic of sex taboo, even though illegal prostitution is at an all-time high in the country. "

Fertility treatments in Britain: a post actually headlined Repugnant Transactions follows a story in the Guardian, Thousands of women leaving UK for fertility treatment, • Women losing patience with NHS waiting lists • Eggs and donated sperm in short supply, study says.
"Couples here are able to exploit the fact that, in some countries, women who choose to donate eggs can be paid, said Culley, with some donors in America receiving up to $10,000. In Britain, by contrast, tight regulation of fertility means egg donors receive only expenses.
"All the evidence is that cross-border reproductive care is growing. Women here do this for all sorts of reasons," she said. "There is a serious shortage of eggs, donated sperm is in shorter supply than before, the cost can be cheaper abroad and some people want IVF which they can't get on the NHS."
...
"Isobel O'Neill, a fertility counsellor in Glasgow, said couples seeking a donated egg who visit the Glasgow Royal Infirmary are told there is a six- or seven-year wait for one on the NHS. Even those willing to pay at the private Glasgow Centre for Reproductive Medicine, where she also works, face a delay of up to a year."

California High Court Upholds Gay Marriage Ban
"The California Supreme Court upheld a ban on same-sex marriage Tuesday, ratifying a decision made by voters last year. The ruling comes at a time when several state governments have moved in the opposite direction.
"The court’s decision does, however, preserve the 18,000 same-sex marriages performed between the justices’ ruling last May that same-sex marriage was constitutionally protected and voters’ passage in November of Proposition 8, which banned it.
The court’s opinion, written by Chief Justice Ronald M. George for a 6-to-1 majority, noted that same-sex couples still had a right to civil unions. Such unions, the opinion said, gives those couples the ability to “choose one’s life partner and enter with that person into a committed, officially recognized and protected family relationship that enjoys all of the constitutionally based incidents of marriage.”
Justice George wrote that Proposition 8 did not “entirely repeal or abrogate” the right to such a protected relationship. Instead, he said, it “carves out a narrow and limited exception to these state constitutional rights, reserving the official designation of the term ‘marriage’ for the union of opposite-sex couples as a matter of state constitutional law.”
The 18,000 existing marriages can stand, he wrote, because Proposition 8 did not include language specifically saying it was retroactive."

Update, hugging: Jorge Ortiz directs my attention to a story in today's NY Times that I had overlooked, some high schools are banning hugs:
"And schools from Hillsdale, N.J., to Bend, Ore., wary in a litigious era about sexual harassment or improper touching — or citing hallway clogging and late arrivals to class — have banned hugging or imposed a three-second rule. "

An innovative early paper on repugnance: Ravi Kanbur, "On Obnoxious Markets", July 2001. Revised version published in Stephen Cullenberg and Prasanta Pattanaik (editors), Globalization, Culture and the Limits of the Market: Essays in Economics and Philosophy. Oxford University Press, 2004.
Professor Kanbur argues that extreme outcomes, and asymmetric and inadequate information, and inequality are big components in making markets obnoxious, and I agree.

I'm personally reluctant to set out a theory of what makes markets repugnant since I always find markets that don't fit into any simple framework. Same-sex marriage, for example, is a transaction that many people find repugnant (and is now once again illegal in California, see above), but it is no more extreme, or subject to asymmetric information, or unequal than heterosexual marriage, which is just about the opposite of a repugnant transaction, what we might call a "protected" transaction.

Signaling for attention: email version

Seriosity.com thinks it has a solution to email overload. They offer firms a signaling service based on an artificial currency ("serios"). Potential message senders are endowed with a fixed supply of serios per week, and they can spend them to indicate their estimate of the value of the message. The company demo suggests that managers may not read underfunded messages, and will read highly endowed messages first. (It isn't clear what the equilibrium would look like in a dynamic environment.)

But creating scarce signals is not a bad idea, see e.g. the mechanism for Signaling on the Economics Job Market , which allows each candidate to send up to two signals.

From their website:
"Attent creates an economy with a scarce new currency (Serios) that enables users to signal the importance of their outgoing email by attaching value. Recipients can use the Serios received to prioritize their attention to messages, and in return use their Serios to assign appropriate weight to their responses."

HT: John Cawley

Where did all the MD license plates go?

When I was a child, it was commonplace to see cars with license plates indicating that the car belonged to a medical doctor. Where did they all go?

It isn't that they aren't still available to doctors who want them, e.g. here is the MA application form, complete with a picture of an MD license plate: Application for Medical Doctor (MD) Plates . So why have doctors reduced their use of this kind of signaling?

My guess is the answer has to do with changes in markets that changed the value of sending such a signal. Here are some conjectures:

Housecalls play a much smaller role in medical practice than they did when I was a child, and so the need for docs to park in odd places and rely on their plates to ward off parking tickets has decreased.

The reputational benefits of being a doctor have decreased.

Drug addicts started to break into cars with MD plates, looking for drugs to use or sell.

Feel free to leave other conjectures as comments...

Hal Varian on ad auctions

Muthu Muthukrishnan at Google in NY has a nice post about Hal Varian, Google's chief economist and a pioneer of the economics of the internet (among other things*). Here is a youtube video in which Hal gives an elementary explanation of Google's ad auction. MR points to this article about Hal in Wired: Secret of Googlenomics: Data-Fueled Recipe Brews Profitability.

Here is Hal's recent paper Online Ad Auctions, forthcoming in the May 2009 AER Papers and Proceedings. Here is Hal's earlier paper, Position Auctions, published in the 2007 International Journal of Industrial Organization. One nice thing about both these papers is that they explicitly take note of the link between ad auctions and the matching literature.

*Hal is the original Renaissance economist. Aside from his academic work on subjects from the internet to public goods provision, he's an author of bestselling texts and business books, and was for many years a NY Times columnist. One of his columns, When Economics Shifts From Science to Engineering, August 29, 2002, on the subject of market design, was about a paper of mine. When I marveled at how succinctly he was able to summarize, he told me that his secret (quoting Elmore Leonard) was to "leave out the parts that people skip."

Waiting lists and late college applications

Students who may be waiting to see if they will be offered positions from some colleges' waiting lists should also be aware that other colleges are still accepting applications.

The Common Application .org has posted a list of 67 of their members who are still accepting applications (including the University of Chicago):
Augsburg College, Berry College, Canisius College,Carroll College, Cazenovia College, College of Mount Saint Vincent, College of Santa Fe, College of St. Benedict-St. John's University, Colorado State University, Converse College, Creighton University, Culver-Stockton College, Curry College, Dominican University of California, Franklin Pierce University, Green Mountain College, Gustavus Adolphus College, Hofstra University, Illinois College, Illinois Institute of Technology, Keystone College, Lasell College, Lawrence Technological University, Loyola University New Orleans, Lynn University, Manhattan College, Marquette University, New England College, Nichols College, Notre Dame de Namur University, Oglethorpe University, Pacific University, Prescott College, Regis College (Massachusetts), Regis University (Colorado), Rollins College, Russell Sage College, Sacred Heart University, Sage College of Albany, Salem College (North Carolina), Seton Hall University, Seton Hill University, Southern New Hampshire University, St. Lawrence University, St. Norbert College, SUNY Fredonia, SUNY Oswego, TCU (Texas Christian University), The College of Idaho, Thiel College, Thomas College, University of Chicago, University of Dallas, University of La Verne, University of Maine, University of Maine at Machias, University of Massachusetts Boston, University of New Haven, University of Tampa, Utica College, Valparaiso University, Wabash College, Webster University, Westminster College (Missouri), Westminster College (Utah), William Jewell College, Xavier University

David Warsh on Auctions and Politics

David Warsh, the Boston-based economic journalist whose weekly internet column Economic Principals talks about economics and economists, writes about last week's NBER Market Design Working Group Meeting, which he attended.

Market design has blossomed in the last decade, in directions that would have been hard to predict. It has also made enormous progress in one of its oldest streams, auction design. This first NBER conference on market design had as its main theme the progress that has been made in auction design, by economists and computer scientists, since the first spectrum auctions in 1994. Warsh writes about that, and the political processes involved in persuading governments to adopt the new auction technologies (not to mention simply communicating them): Auctions and Politicians.

Market for textbooks

The Washington Post has a story on the educational software company Aplia, founded by Paul Romer: An Economist, an Academic Puzzle and a Lot of Promise. It makes a number of interesting observations about the design of the textbook market, and how interactive software that gives students immediate feedback, and lets them participate in experimental economics style interactions, complements the traditional textbook and lecture style of instruction.

"Students seemed to like Aplia's engaging and easy-to-use software, as well as the feedback. Professors liked Aplia even more. It allowed them to leverage the grade-grubbing instincts of today's college students to get them to do homework -- but without having to spend countless hours reading and correcting the assignments. They also got reports from Aplia identifying which students were having the most trouble with the material and which concepts were stumping the class as a whole. "
...
"By relieving instructors of the considerable burden of reviewing homework assignments, the technology makes it possible for universities to require professors to teach more students, either by increasing class sizes or the number of classes they teach. More important, it frees instructors to spend more time preparing for class, working with individual students and even doing their own research. "

It may also allow publishers to circumvent the secondhand market for textbooks, as the software license can be separated from the book.

HT: Greg Mankiw