Returns to Double Majors

Our department offers several double majors, the most popular being an agricultural economics & accounting double major. Only our most dedicated and brightest students pursue this degree, as the courses are tougher and the student foregoes all electives.

For those unfamiliar with double majors, it is not two undergraduate degrees. I tell students its like 1.5 undergraduate degrees. Our graduates with ag econ / accounting double major basically have 75% of an ag econ and 75% of an accounting degree - in my opinion. They have to take additional hours, usually about ten hours but rarely more than 15, and forego all electives if they wish to graduate in a timely manner.

Is it worth it? A new study published in the Economics of Education Review titled, "Double your major, double your return?" provide some insights. Using a large and detailed dataset, and a conventional regression equation, the authors estimate the relationship between obtaining a double major and subsequent salaries.

As with all salary regressions, the reader should note that a positive impact of double majors on salary could be due to the enhanced learning from the double major, due to the the type of people who choose to pursue double majors, or both.

For agricultural economics advisors, below are the relevant highlights. The paper does not contain data on ag econ / ag-business degrees, but business degrees are close substitutes for these degrees, so the study results are useful to advisors like myself. These results control for individuals who pursue a second [whole] degree and do not include those who later obtain a graduate degree.

• Across all students and majors, obtaining a double major is positively related to subsequent salaries, increasing salary by 2-3%.
• This small premium is an average, an average of many different double majors, and the variability around the average is large.
• Having a double major in two business fields (e.g. management and accounting) increases salary by 10%, compared to a single business degree! This is relevant to ag econ / accounting double majors, and this premium makes it worth considering such a degree.

Often, when students show interest in double majors, I suggest they focus their interests instead on a graduate degree. Undergraduates can sometimes take hours that will be credited towards a subsequent degree, like the excellent agricultural economics program at the University of Florida. Indeed, the study shows that a student currently seeking a single business major can (a) pursue a double major in another business degree for a salary premium of 10% or (b) an MBA with a salary premium of 47%! Moreover, the authors show that if one plans to later obtain a graduate degree, there is no reward for obtaining a double major.

In the future when advisees ask me about double majors in areas like agricultural economics and accounting, I plan to suggest it could increase their salary by 10% - if they can do well in the double major. However, I also urge them to consider going to graduate school instead.

Of course, there are other reasons to pursue a double major. Some students may be particularly interested in two areas, or may want to explore different subjects to help them identify a degree best fit for their personality.

Students not academically gifted could be harmed from pursuing a degree beyond their capabilities. Just because people with the last name of "Trump" tend to be billionaires does not mean that I should change my name to "Bailey Trump" and expect anything of benefit!

A sentence in the first paragraph struck me as odd: they state 25% of college graduates have more than one undergraduate major. That, simply, just does not seem true.

Best Wishes!

Bailey

Elasticities for Teaching

Most agricultural economics teachers spend a considerable amount of time teaching elasticities. Students like examples, and they like those examples to be real. In a recent Economics Letters article (see Price Elasticities of Demand are Minus One-Half), Kenneth Clements provides an interesting table and figure of elasticities, shown below.

Enjoy!

Some Love to Learn

Are you a teacher who has come to believe only professors love to learn? Or, do you want to illustrate to your students the importance of agricultural economics?

The Freakonomics Blog recently published a post called "Ask an Agricultural Economist," available here.

Be sure to check out the tons of questions people ask at the bottom...wouldn't you love to have these readers as your students?

Best Wishes,
Bailey

Happiness and Careers

In my last two posts I discussed the area of positive psychology, the study of how regular people can become happier. In both posts I mentioned a superb book on the subject called The How of Happiness. The author, Sonja Lyubomirsky, has my profound respect for the research she has conducted and her efforts to carry her research to the general public.

How excited was I when, somehow, Sonja discovered those two blogs and sent me an email thanking me. In her email I noticed that she has started a blog, and being a big fan of her work, immediately started reading. One particular blog is of great importance to academic advisors.

In this blog, Sonja stated that the number one factor leading to personal happiness is the person's job. Her blog states...

people who have jobs distinguished by autonomy, meaning and variety – and who show superior performance, creativity, and productivity – are significantly happier than those who don’t...

We tell our students they should work hard to get a good job that pays good money. Now we can tell them its more than a matter of money, it is a matter happiness. What could be more important?

Teaching Happiness

In the last 20 years a group of psychologists have been busy determining what makes us happy. It all began when Martin Seligman, a psychologist who discovered the emotions behind depression, gave his speech as President of the American Psychological Association. After noting that psychologists have made great strides in helping terribly unhappy suffer less, he suggested that maybe they should begin helping regular people even happier. Instead of focusing on mental illness, perhaps they should focus on mental well-being as well?

Positive psychology was born, and a wealth of books as well. In my last post I mentioned my favorite book in the positive psychology area, The How of Happiness. Some of the positive psychology studies use statistical analyses of cross-section data to determine why some people are happier than others. For those with a democratic bent, these studies find income equality is a contributor to happiness. For those with a capitalist bent, wealth does also.

Most interesting are the intervention studies. They take a group of people, randomly separate them into two groups, and attempt to determine if simple things like writing down things you are grateful for can make you happier. Indeed, many such simple tasks do make people happier.

Since we teach our students how to improve their physical health, should we also teach them to improve their mental health through the findings of positive psychology? Wellington College in the United Kingdom already does, as well as 200 colleges and graduates schools in the U.S. The "happiness course" at Harvard is also the most popular, with 855 students enrolled during the Spring Semester of 2007.

What does this have to do with agricultural economics teachers? If you love your students, you want to see them happy. The lessons of positive psychology are simple and noncontroversial. To become happier, people can
(a) practice experience gratitude
(b) practice extending compassion towards others
(c) consider religious involvment
(d) engage in activities where you "get lost in the moment"
(e) cultivate optimism
(f) seek and nurture friendships
(g) exercise
... and so on.

Sometimes we all need reminding that the goal of life is happiness, and students should not get caught up in academic achievements that they forget to be happy. If you are like me, teaching is rewarding because of the positive effect we [perceive to] have on students' lives. If you feel rewarded teaching an economic concept, just think how satisfied you will feel teaching students to be happy!

You can incorporate positive psychology into your advising in little ways. For example, this is a brochure I give to all my students about how to be a successful college student. Notice one whole page is devoted to tips on being happy.

I don't know if it has an impact, but the thought that it may has certainly make me a happier person!

Dealing With Failure

College is a crucial point in a person's life. The decisions they make, such as the career they choose, will have a large impact on their happiness in life. Students are quite concerned with developing into happy individuals. As well they should, everyone is susceptible to sadness and depression, and students well know that many adults (should I say most?) are unhappy with their jobs and often their life.

Students are concerned with their happiness, and I have learned that they thoroughly enjoy class discussions about what makes people happy. I often discuss lessons from the excellent book, The How of Happiness. The major lesson from this book is that 50% of peoples' happiness is determined by their genes, 10% by their circumstances (including their job and income), and 40% by their general outlook on life. This is good news! Though not a majority, a significant portion of our happiness is theirs to control!

I believe so much in this book that last year I purchased multiple copies and gave it for free to certain students I was particularly fond of.

In hopes that I can help students evolve into happy adults, I have one particular lesson I discuss every semester, a lesson about dealing with failure.

Believe me, I know failure, and I like to share my greatest failure with my class. Recently I was given the opportunity to write a textbook on agricultural marketing and price analysis. Overall it is an excellent book, though I am biased, and is a considerable improvement over existing textbooks. Yet in writing the book I made two huge mistakes (1) I calculated an international market equilibrium incorrectly and (2) incorrectly described the three stages of production for a firm. This was a HUGE embarrasment for me. This book was supposed to me one of my greatest achievements, but however small those two errors may seem in the overall writing of the book, because of those two errors this textbook instead feels like my greatest failure.

To avoid lasting sadness, to avoid depression, psychology has clearly shown how one must deal with such failures (I have read tons of books on the psychology of happiness and depression). Instead of viewing this failure as an indication that "I" am a failure, I must instead understand that the "textbook" was a failure - a failure that does not have to be repeated. This is the difference between self-esteem and self-efficacy. Self-esteem refers to our overall view of ourselves; self-efficacy refers to our perceived ability to perform certain tasks.

It is important to acknowledge failures when they occur, so that we may improve. It is more important not to let failures alter our overall appraisal of ourselves. While I did not perform as well as I hoped in writing the textbook, I am still a successful researcher and teacher overall. As long as I can recognize this, happiness is always within reach.

It is often said that to teach a concept we must first let the student fail. Let the student try to calculate a market equilibrium, and when they fail, show them why they failed, and keep at it until they succeed. If we are going to make them fail, we should teach them to deal with failure!

Students will fail in tasks, in and outside the classroom. It is more important that students learn to be happy than to learn economics. Let us commit to helping students how to deal with periodic failures so that they maintain a favorable appraisal of themselves. I have found the best way to do this is to share your own failures, and how that failure should be acknowledged, it doesn't mean that you are a failure.

And if you have no failures of your own to share, feel free to use my failures as an example!

Wishing the Reader Happiness,
Bailey

Antitrust and Special Interests

Consider the following story...

In my idyllic suburban hometown of Wellesley, Massachusetts, the police shut down a brothel a few days ago. According to the Wellesley Townsman, one of those arrested for running the business was a man named William Eastwick.The paper also notes that six months ago the Wellesley police shut down a similar operation nearby. That police action was based on a tip from the same William Eastwick. Oddly, when referring to the Eastwick tip, the town paper says "it is unclear why he did that."

From Reason: Hit and Run, July 4, 2008

If we teach our students well, they will know exactly why Mr. Eastwick made this tip to police - to stifle competition.

Using the government to thwart business competitors has a long tradition in the United States. I contend that is largely what antitrust regulation is intended to do. I cannot identify one single antitrust case where the "monopoly" in question was shown to NOT benefit consumers. Indeed, the only group the "monopoly" in question hurt was its competitors.

Consider the following letter from Don Boudreaux, a George Mason economist, in the Wall Streent Journal...


Edwin Rockefeller accurately describes antitrust proceedings as "the debris of past political demagoguery" (Letters, July 10). Research shows that the 1890 Sherman Antitrust Act was not sparked by fears of high, monopoly prices: Real prices charged by the so-called trusts fell steadily during the decade leading up to the passage of that statute. Instead, that first national antitrust statute was the result of hostility to the low prices charged by the innovative entrepreneurs who pioneered the use of new technologies that, for the first time, enabled individual firms to serve a transcontinental market.
Populist hostility to the efficiency of firms such as Standard Oil filled congressional debate over the act. Congressman William Mason (R., Ill.), for example, thundered on June 20, 1890, that "Trusts have made products cheaper, have reduced prices; but if the price of oil, for instance, were reduced to one cent a barrel, it would not right the wrong done to the people of this country by the 'trusts' which have destroyed legitimate competition and driven honest men from legitimate business enterprises."

Donald J. Boudreaux

The pioneering piece of research to consult here is Thomas J. DiLorenzo, "The Origins of Antitrust: An Interest-Group Perspective," International Review of Law and Economics (June 1985).

This has clear implications for teaching. We always teach students about market power and monopolies. Associated with these lectures are illustrations of how antitrust regulation can (emphasis on the word can) improve societal welfare by preventing the formation of monopolies. Let us not forget to teach the realities of antitrust regulation, that it emanates largely from interest groups who are hurt by the success of rival companies, that it typically only benefits those interest groups who cannot compete, and that it rarely (if ever) benefits consumers.

For an excellent, insightful podcast on antitrust regulation, see the October 1, 2007 edition of the EconTalk podcast, available here.

Teaching Insights From the Military

In this article, a professor discusses three key insights into becoming a successful teacher that she learned in the military. A superb read.

What Salary Should I Expect?

Just as a good academic advisor makes sure their advisees are prepared for the classes in which they enroll, they make sure students are prepared for their job interviews and career. Our department is particularly effective at helping students construct their resume and prepare for the job interview. However, our students often report that they feel unprepared when it comes time to negotiate salaries. They simply do not know what salary they should ask for.

The Student Success Center in our ag college tries to be collect data to be of assistance, but may do more harm than good. The Center uses internet surveys of recent graduates asking one simple question: how much do you make? They do not ask whether the graduate had the freedom to take the best offer, or whether they were constrained in their choice of jobs. Some students need to stay close to their family, and some choose to follow their spouse to areas with little job opportunities. The average salary that emerges from these data is not the salary good ag econ students should try to negotiate.

More useful data can be found in a small survey I conduct of recent graduates from our departments who I know well. The sample contains only 19 individuals, but I know the students' capabilities well, I know if they were limited to a particular area, I know their exact job, and I know their salary, including information on retirement and health benefits.

From these data, I make the following recommendation to students. These salaries represent rural areas and Midwestern cities, not coastal urban areas.

• If the student is a high achiever (high grades, many awards, leadership positions, etc.) who is not limited to a certain region - Attempt to negotiate a salary of $42,000 or above, including full health insurance and retirement benefits. Our best students make $52,000-$62,000 (with these benefits). Monsanto recruiters told me that their base offer is $42,000 with benefits.


• If the student is an average achiever and is not limited to a certain region - Do not accept a salary under $30,000 (with benefits) without looking elsewhere, unless it is a job you particular like.


• If the student performed poorly in school and/or is limited to a particular region - Do not expect your college education to give you a huge bump in salary over those without a college degree. These students often make less than $30,000 and as little as $24,000, perhaps even without benefits.

One more piece of information can be found in the below graph. This graph shows the average salary for economics majors and other majors across the nation. With less than 5 years experience, the average salary for economics majors is about $45,000. For management, accounting, and finance majors the salaries are also above $40,000, and agricultural economics can be thought of as a good economics degree with a particular focus on business management.

Thus, my suggestion that good ag econ students who are not limited to a region should seek a salary of $42,000 or above seems consistent with other data. If you relay this information to your students, don't forget to show them the really cool part of the graph...the part that shows economics majors make much more than their business counterparts later in their career!

Good Ole Price Controls!

Students love real-world examples, and while they are hard to find for some economics topics, they certainly are not for price controls. Oil in the 70's, rent control in New York, the minimum wage: price controls are one of the easiest concepts to teach because examples abound.

While examples do abound, the more recent the example the better. Today NPR ran a story titled "Credit Crisis Shakes Confidence in Student Loans." To help students the government reduced the rate lenders can charge on student loans. Yet this will not help students if it causes those lenders to withdraw funds for loans -- which is exactly what they did.

Besides teaching that price ceilings produce a shortage, we should emphasize to students that while government can control prices, they cannot control costs. We should also point out that reducing the profits of a seller does not always make the buyer better off. Life is not a zero-sum game, and neither is lending. Either both parties benefit or neither.

The article can be found at http://www.npr.org/templates/story/story.php?storyId=92308792, containing both text and audio. The most relevant part of the story is shown below. Enjoy!

Wadsworth says the problems actually began last September, when Congress passed the College Cost Reduction and Access Act. It made more financial aid available to the neediest students and lowered the interest rates for new borrowers.

It paid for all this by cutting the interest that banks and private lenders earn on every student loan they make. Wadsworth says it also doubled the fees that lenders pay the federal government for every loan they issue.

"It became less profitable — or in some cases unprofitable — for lenders to lend money," he says.

Lawmakers defended the act, arguing that they were more concerned about students than lenders' profits. Then the subprime mortgage crisis hit.

"The financial markets went into turmoil and that had a spillover effect into student loans," Wadsworth says.

By the end of 2007, he says, lenders could not raise the money to make new loans. And those that could quickly realized that the costs of making those loans had gone up dramatically. So some lenders stopped making loans.

Keeping Students Awake: Videos and Music

Students want variety. For some course topics they prefer the teacher to use only the chalkboard, and for the teacher to go slow, striving for clarity over entertainment. However, students do not want every lecture to be like this. Periodically, or perhaps frequently, they want to have fun. They want to watch videos. They want to link economics to something other than prices and interest rates, like pop culture. They want to be silly, to talk, to laugh.

Here are two teaching aides for these "other" lectures.

(1) Dirk Mateer of Penn State has put together an excellent YouTube channel with videos useful for teaching economics. The website address is http://www.youtube.com/user/dmateer. Take a tour. Watch the videos. You will certainly find at least a few useful. Dirk also wrote a paper on teaching with YouTube available at http://www.aeaweb.org/annual_mtg_papers/2008/2008_669.pdf, but reading the paper is really unnecessary if you are going to peruse the videos anyway.

(2) Students love music. Bringing music and music lyrics into the class for articulating economic concepts is now easy, thanks to, once again, Dirk Mateer. Available at http://www.musicforecon.com/ (click on the from Abba to Zeppelin link at the right), the site provides selected music and the lyrics from that music with a relationship to economics. He even took the time to write assignments for you based on the lyrics.

Hopefully one or both of these links will help keep your students awake. If they are not awake, they are not learning!

Cheers,
Bailey

Don't take economics seriously

The economic approach to living life and making profits, as taught in class, can be intimidating. It requires maximizing [discounted] expected utility over an infinite life, using numerical computational techniques to developing an investment portfolio, and evaluating risky gambles by carefully considering the probability of each outcome and weighting that probability by the outcome payoff.

As teachers, we should periodically remind students that these are just models that help us understand the world. They do not necessarily reflect the thought process of even the most successful business person. The models may describe behavior, but not how decisions are made.

Example 1: When a professor from Columbia had trouble deciding on whether to accept a rival's offer or stay at Columbia...

His colleague took him aside and said, "Just maximize expected utility - you always write about doing this." Exasperated, the professor responded, "Come on, this is serious."
- page 1 from Gut Feelings.

Example 2: Harry Markowitz won the Nobel Prize in Economics from devising a mathematically sophisticated, and theoretically superior, method for determining how to allocate money over different investments. This method requires much data, much computer effort, and much programming. What does Harry do in practice? He simply allocates the same amount of money over each investment.
(from page 26 of Gut Feelings.)

When we describe our models of human behavior, and those models seem foreign or unrelated to actual life, we sometimes lose students. Let's remind students what models are really used for, and what people really do, so that they know we are indeed relevant to the world.

Becoming a Great Teacher: Part 1

This entry is the first part in a series of blogs on what constitutes a great teacher from the students' point of view. An introduction to the topic and the research methods used is available here.

An impressive undergraduate, Carol Cook, interviewed 45 undergraduate students in agricultural economics. First, she asked the students to describe the attributes of a great teacher, and then to describe why those attributes are important to them.

For me, the most useful data from the interviews are the attributes most frequently listed. As far as the most important attribute to the students there was no contest: dynamic lecturer.

Of the 45 interviews, 58% of the students listed dynamic lecturer as the most important attribute - more than any other attribute. Of course, they did not all use the phrase "dynamic lecturer." In all probability, none of them did. Carol and I had to look at the phrasing they used for their answers and group them into categories. Based on their descriptions of great teachers, most of their answers were grouped under the category dynamic lecturer.



Next, we reviewed the interviews to determine the four main reasons that students value having a dynamic lecturer as a teacher. During the interview, after naming a few attributes of great teachers, and ranking the attributes, the students were asked to take one or two attributes and describe why it is important to them. Specifically, we asked the consequence of a teacher who is a dynamic lecturer that is important to them.

The four most common answers are shown above. Having a teacher who gives dynamic lectures helps them (1) understand the material (2) stay focused in class (3) retain the material and (4) leads to a valuable education (meaning the students extract value from the class).

Whether or not you agree with the students, this is what the students think. If you want to be thought of as a great teacher in the students' eyes, you should strive to become a dynamic lecturer.

In subsequent blog entries, we will describe strategies for becoming this dynamic teacher that students so love!