Roya Dadgar

2018 John J. Peterson Scholarship Recipient

Biography: Roya Dadgar is a third year Business Economics major and Public Affairs minor. She is part of the executive board of a consulting club on campus, UConsulting, and oversees the external affairs of the club. She also plays club tennis and mentors high school students in financial literacy. As part of the UCLA Career Peers, she is passionate about helping fellow students pursue their career goals. During her free time, Roya enjoys spending time with friends, playing and watching tennis, and trying out new things.

Future Plans: Roya has accepted an offer to be a Summer Scholar at Deloitte Consulting in the Human Capital branch. Her passion for employee well-being and her curiosity for the future of the workplace make Human Capital a good fit. She plans to continue to work in consulting after graduation and pursue an MBA later on. Ultimately, she would like to work towards expanding corporate social responsibility.

What does this scholarship mean to me?: I am honored to have been selected as the recipient of the John J. Peterson Scholarship. My family is grateful for this scholarship’s contribution towards my tuition which allows me to reduce my work hours and further focus on my studies and extracurriculars, through which I hope to help shape other students’ UCLA experience as well. I am immensely thankful that the Peterson family chose to invest in my education and hope that I am able to do the same for a student in the future.

Haomin Chi

2018 Professor Henry Simons Endowed Undergraduate Scholarship Recipient

Biography: Haomin Chi is currently a senior with a Business Economics major and an Accounting minor. As a transfer student from De Anza College, he believes that university experience can significantly enhance his overall ability and guide him toward the actual business world. After coming to UCLA, he found an internship in Revelations Entertainment which helped him explore to the business culture in the United States. This past summer, he spent 4 weeks in a real estate company in China. In her spare time, she enjoys playing basketball and other sports with his friends.

Future Plans: After graduation, Haomin will apply to graduate school to improve him ability in finance and pursue him enthusiasm in finance more deep. In the future, he plans to pursue her his career in the finance field. After that, he will return to China and seek employment in financial institutions to pave the way to investment bank.

What does this scholarship mean to me?: I am incredibly honored and grateful to be one of the recipients of the Professor Harry Simons Endowed Undergraduate Scholarship and I am so thankful for all the donors who have supported me in my education. This scholarship has initially relieves my financial stress and has allowed me to spend less time to worry about financial issue. Thanks again for the generosity of the donor, and I hope I can give back to the society one day in the future.

 

Anqi Chen

2018 Jeffrey W. Baus ’59 Scholarship Recipient

Biography: Anqi Chen is a third year student double majoring in business economics, piano performance and minoring in accounting. She was born in China and moved to Italy at age 12. She is fluent in three languages and is proud of her multicultural background. She started her college journey as a music performance major. However, after excelling in her economics and accounting classes, she decided to pursue business economics as her second major with the accounting minor. Coming from a small Italian town with minimal infrastructure and few resources pushed her to be proactive at UCLA and fully utilize the resources on campus to achieve holistic growth as a student and as a leader. She has multiple leadership positions on campus, such as co-founder/president of the student organization Bruin Bonding, Peer Learning Facilitator for Econ 11 – Macroeconomics Theory, Peer Coach for the UCLA Financial Wellness Program and International Student Ambassador for Italy.

Future Plans: Anqi will be an audit/assurance intern at Deloitte this incoming summer in the San Jose office. She plans to become a Certified Public Accountant after graduation. She does not know yet if she can stay in the U.S for long, but she is open to opportunities all around Asia and Europe. She is also planning to pursue a Master degree after gaining few years of working experiences.

What does this scholarship mean to me?: I am so grateful and honored to receive the Jeffrey W. Baus ’59 Scholarship. It means so much to me. Before receiving the scholarship, I was struggling financially due to the high tuition fee for international students. I had to work two on campus jobs to help me pay rent and personal expenses. I was often stressed because of my busy schedule. This scholarship is a great financial support as now I can focus more on my academic endeavors. I cannot find words to express how much I am thankful for Mrs. Baus for this precious award. I will work hard to pursue my career goals and hopefully I can give back to the community one day as well.

Denis Chetverikov named Sloan Fellow

Denis-Chetverikov

Denis Chetverikov

Denis Chetverikov has been named as a 2019 Sloan Fellow, one of eight economists nationwide.

Denis Chetverikov is a theoretical econometrician with broad interests. His worked has greatly enhanced our understanding of high dimensional and nonparametric models – an area often referred to as “big data”.  Among his most important contributions are the high dimensional central limit theorem and the incorporation of machine learning methods into econometrics.  Together, these insights have enabled applied researchers to conduct inference using new complex models and estimators.

The official announcement is here.

Lee Ohanian’s work on WWII featured in Financial Times

A recent article in the Financial Times leans heavily on research from UCLA Professor Lee Ohanian.  According to the piece, “How the US actually financed the second world war,” the US raised taxes on capital from 44 to 60 percent during the second world war.  Further, labour taxes doubled, from 9 to 18 percent.  According to Ohanian, the higher taxes were used to make borrowing possible and keep interest rates down.  Ohanian said, “The US typically has done a really good job of financing wars that don’t impose a huge burden on the economy.  There’s a tension in that ideally you’d like to finance with debt as much as possible, so you can spread the distorting burden of higher taxation out over as many years as possible.  Ideally, you don’t want to have someone hit you on the head with a hammer really hard once, but if someone taps you on the head with a hammer very gently for ten years, you’re going to prefer that.”

To read the rest of the article, please visit the following link.

Michela Giorcelli wins Fall 2018 Scoville Teaching Award

The UCLA Department of Economics congratulates Professor Michela Giorcelli for winning the Scoville Award for best undergraduate teaching in Fall 2018 for her class Econ 181, Development of Economic Institutions in Western Europe.

This course applies economic theory and quantitative reasoning to study the economic history of Western Europe from the 18th to the 20th century.  Among other topics, it covers the Malthusian theory, the Industrial Revolution, the demographic transition, the formation and the persistence of institutions and organizations, and the development of Europe during the 1950s and 1960s.

Congratulations Professor Giorcelli!

Firming Up Inequality

By Till von Wachter, Jae Song, David J Price, Fatih Guvenen and Nicholas Bloom

We use a massive, matched employer-employee database for the United States to analyze the contribution of firms to the rise in earnings inequality from 1978 to 2013. We find that one-third of the rise in the variance of (log) earnings occurred within firms, whereas two-thirds of the rise occurred due to a rise in the dispersion of average earnings between firms. However, this rising between-firm variance is not accounted for by the firms themselves but by a widening gap between firms in the composition of their workers. This compositional change can be split into two roughly equal parts: high-wage workers became increasingly likely to work in high-wage firms (i.e., sorting increased), and high-wage workers became increasingly likely to work with each other (i.e., segregation rose). In contrast, we do not find a rise in the variance of firm-specific pay once we control for the worker composition in firms. Finally, we find that two-thirds of the rise in the within-firm variance of earnings occurred within mega (10,000+ employee) firms, which saw a particularly large increase in the variance of earnings compared with smaller firms.

Read full paper here

 

Lee Ohanian on LA Teacher’s Strike

This article by Lee Ohanian originally appeared in The Hill.

Last week, 31,000 Los Angeles Unified School District teachers represented by the United Teachers of Los Angeles (UTLA) union went on strike for the first time in 30 years.

Substitute teachers and administrators make up a skeleton crew that is keeping schools open, and about one-third of the 640,000 district students are attending class.

The strike is exacting a tremendous toll on parents, many of whom are poor and who must decide whether to take time off of work to care for their children or send their children to grossly understaffed schools.

The issues underlying the strike highlight the challenges facing public school administration, teacher unions and school funding, and shows what must change if U.S. public schools are to increase student achievement.

The strike is about teacher pay, classroom size and increasing the number of school support staff, including counselors, librarians and nurses. But at a deeper level, the strike is really about suppressing the state’s charter schools, which are the major competition facing traditional schools.

Charter schools, which grew out of interest in having public alternatives to traditional schools, began in 1992 and now enroll over 600,000 students within California. Charters have become increasingly popular, and their number has doubled over the last decade.

Charters now enroll about 10 percent of all schoolchildren in the state but enroll about 20 percent of Los Angeles schoolchildren. The rapid growth of charters reflects parent dissatisfaction with some traditional schools as California school test scores are among the lowest in the country.

The dramatic growth of charters has been strongly opposed by traditional schools and their teacher unions because charter schools take students — and education dollars — away from traditional schools.

Lower student enrollment within LAUSD traditional schools is an important reason why the district does not have the funds to meet the union’s demands.

The structure and management of charter schools differs considerably from that of traditional schools. Charters do not face the same regulations as traditional schools, and 70 percent of charter teachers are not in a union.

The whole premise behind charter schools is that they have greater flexibility in hiring, human resources management and curriculum decisions, which gives them the freedom to develop new ideas and experiment with different teaching practices.

The key question is whether a child’s learning will improve if he or she attends a charter rather than a traditional school. While this is a difficult question to answer, several studies suggest that learning outcomes are significantly higher in charters.

One study of New York charters found that charter education could eliminate much of the achievement gap between schoolchildren in Harlem and schoolchildren in Scarsdale, an affluent New York suburb.

Traditional schools in LAUSD can’t afford to lose any more students to charters. The UTLA is trying to preserve school enrollment — and funding — by attacking charters. During negotiations, UTLA President Alex Caputo-Pearl stated:

“We’re here … to invest in our existing schools. We must do this instead of continuing the unsustainable, destructive practice of unregulated charter school growth,”

If the union gets its way, state legislators, several of whom have received support from teacher union campaign contributions, will severely limit the number of charters, and many parents will have no choice other than to keep their children in traditional schools.

Ironically, the UTLA’s strategy of castigating charters as the villains and asking government for protection from their competitor, is the same strategy that was used by the U.S. auto and steel industries in the 1970s and 1980s.

Those industries were rapidly losing market share to very efficient foreign competitors and sought — and received — protection from imports through voluntary export restraints.

California schoolchildren would be much better off if traditional schools retained students by implementing common-sense reforms rather than by capping the number of charter schools.

These reforms include modifying teacher tenure by increasing the tenure review period beyond its current 18 months of teaching and by making it less costly to dismiss poorly-performing teachers.

Firing a tenured teacher for poor performance can take several years and cost over $250,000 per case. Accordingly, only .0007 percent of California teachers are dismissed for poor performance. Other reforms include replacing seniority-based pay and layoff policies with merit-based pay and layoff policies.

Research by Stanford University economist Eric Hanushek suggests that implementing these reforms would move California schooling outcomes from near the bottom among U.S. state rankings to near the top.

Existing tenure and layoff policy practices are so costly that several Los Angeles schoolchildren filed an equal protection lawsuit against the LAUSD in 2012, arguing that they were being deprived of their right to an education by an effective teacher.

One of the plaintiff’s expert witnesses presented research findings that showed that students lost more than nine months of learning when taught by an ineffective teacher. This is particularly striking when one considers that the school year is only nine months long.

Judge Rolf Treu, who ruled in favor of the schoolchildren, remarked that the evidence presented regarding ineffective teachers was not only compelling, but it “shocks the conscience.” The verdict, however, was overturned by the California Supreme Court on appeal.

The UTLA strike provides policymakers with a unique opportunity to address the underlying issues that are depressing the quality of California schools. It is time to stop protecting California’s largest monopoly and implement reforms that will improve student learning.

Lee E. Ohanian is a professor of economics at UCLA and a senior fellow at the Hoover Institution, Stanford University.

Sam Peltzman on Harold Demsetz

I have just learned of Harold Demsetz’s death.  I knew he had been in decline for some time, but the news still occasioned a great sadness.  Harold was a major influence on me and on the world at large.  It is this larger significance of his work that I want to emphasize here.  We have lost one of the giants of economics in the past century.

Many will rightly cite his 1972 AER paper with Armen Alchian on team production or the 1967 AER paper on property rights.  Either would have been sufficient for the Nobel Prize that he inexplicably didn’t get.   I want to highlight here a couple of other papers that also had an outsized influence.  Here the influence was as much outside the profession as within. Harold’s work had profound effects on public policy, or at least on the framework of how policy is analyzed and discussed.

His 1973 Journal of Law and Economics paper, “Industry Structure, Market Rivalry, and Public Policy” fundamentally altered our understanding of the relation between market structure and market performance, and it had a significant impact on how economists think about competition policy.  This paper represents a continuing challenge to the intellectual basis for that policy in the field of mergers. The prior orthodoxy about how market structure affected competition reigned from the time of Edward Mason’s work in the late 1930s until well into the 1970s. It was embedded in a “structure-conduct-performance” (SCP) paradigm whereby market performance was ultimately determined by a market structure that was treated as exogenous.  A large empirical literature developed that generally showed a positive correlation between price-cost margins and the concentration of output among sellers.  Since concentration was treated as given, the correlation was interpreted as demonstrating the price-enhancing effects of oligopolistic interaction.  If merger policy has any factual basis today it would be rooted in this empirical SCP literature.  The “Demsetz critique” of this literature in the 1973 JLE paper showed how the same profit-concentration correlation could arise from the cost and price reducing effects of competition in innovation. He also showed that much of the previous literature was more consistent with the competitive interpretation, whereby concentration was not a given but the result of innovative “winners” taking market share from other firms.  This work dramatically altered empirical research in industrial organization: the search for cross-sectional correlations between profit margins and concentration ratios basically ended, and few industrial organization economists today would draw the kind of causal inferences from such correlations as in the SCP literature.  Competition policy makers would also today be less likely to infer harm to competition solely from evidence that sellers’ profitability was above some norm. Merger policy has evolved away from a mechanical restriction on market concentration to a more “rule-of-reason” approach, whereby evidence of efficiencies from mergers can be weighed in the balance.   I think this quite profound change in how both economists and policy makers think about market concentration is Harold’s legacy.

The other paper I want to discuss also lives on in public policy.   His 1968 JLE paper “Why Regulate Utilities?” showed how “competition for a market” could marshal private information to achieve the public policy objective of price regulation more efficiently than direct price regulation.  Utilities are of course the canonical price regulated natural monopoly. Harold proposed to substitute a “Demsetz auction” for the government price regulation.  This was an auction whereby bidders competed for the right to be the monopoly supplier by specifying the lowest price they would accept for output.  Such an auction would mobilize private information on who was the low cost supplier.  The real innovation here is to clarify greatly the distinction between the objectives of public policies on market failure (in this case the objective would be the lowest price consistent with efficient supply) and the mechanisms that could implement these objectives most efficiently.  While the “Demsetz auction” has had limited applicability in the precise form he proposed, the essential logic appears in much of the subsequent wave of privatization, in the vertical restructuring of natural monopolies such as electricity, and in the provision of public services. To mention just one example, those London double decker buses used to be government run. They are now run by private operators who compete to bid the lowest acceptable subsidy (positive or negative) to run the buses on the terms specified by the government.  Very Demsetzian.  Perhaps such innovation would have occurred with or without Harold’s paper, but the fact is that such marshaling of competition for provision of public services was virtually unknown before.

Few of us who analyze and debate public policies leave a mark on the practical affairs of the world.  Harold’s work did so, and we are all the poorer for losing him.

Sam Peltzman

Booth School, University of Chicago (Emeritus)

Lee Ohanian in the Wall St Journal

Nearly half of millennials say they prefer socialism to capitalism, but what do they mean? “My policies most closely resemble what we see in the U.K., in Norway, in Finland, in Sweden,” Rep. Alexandria Ocasio-Cortez told “60 Minutes.” Yet Sweden’s experiment with socialist policies was disastrous, and its economic success in recent decades is a result of market-based reforms.

Until the mid-20th century, Sweden pursued highly competitive market-based policies. By 1970 Sweden achieved the world’s fourth-highest per capita income…. Read full story on The Wall Street Journal