Monthly Archives: June 2014

My latest blog post for The Economist’s American-politics blog concerns affirmative action and a recent study of a race-blind affirmative-action scheme in Israel. An excerpt:

Jun 18th 2014, 1:04 by S.H. | LONDON

AFTER the Supreme Court in April upheld Michigan’s ban on race-based affirmative action in university admissions, some have begun wondering what alternatives are available to institutions seeking diversity. Indeed, affirmative action as we know it is probably doomed: voters have banned it at universities in at least eight states, and four more look likely to follow suit.

This newspaper has argued against race-based admissions policies. Instead, we encourage selection procedures that offer modest preferences to economically disadvantaged students. This is the plan set out in “Place, Not Race”, a new book from Sheryll Cashin of Georgetown Law School. She proposes a race-blind, class-based type of affirmative action whereby students who have thrived in poor schools or rough neighbourhoods are given special consideration. Some worry that this may lead colleges to accept ill-prepared applicants, who may then drop out (a problem that has plagued some universities with race-based preferences). But new research suggests that these concerns may be unjustified.

In an article published in the latest issue of the Economics of Education Review, Sigal Alon of Tel Aviv University and Ofer Malamud of University of Chicago write about the promising results of a colour-blind, class-based affirmative-action programme in Israel. In the early 2000s, four of Israel’s most selective universities began giving preferential treatment to poorer students, as indicated by an applicant’s neighbourhood and high school. Based largely on these two factors, an applicant is scored on an index of socioeconomic disadvantage; those who meet a pre-determined threshold are eligible for special consideration, but not guaranteed admission. After analysing the academic outcomes of more than 5,000 students, the authors found three particularly noteworthy results.

First, those who met the threshold were more likely than average students to have come from deprived neighbourhoods, to be of Asian, African or Arabic origin, to have immigrated and to be poor. Second, the policy had a significant impact on admissions; applicants who met the threshold were 13% more likely to have been accepted to one of the four elite institutions than those who fell just short of the required number of points. Third, the students who were likely to have been admitted in part because of their disadvantaged backgrounds did not fall behind; they had the same average GPA and graduation rate as their peers who were ineligible for the programme.

Read the full post here.

Simon Hedlin

My first contribution to The Economist’s Free exchange blog is about helping people to pay back their debt:

BENJAMIN Franklin said he would rather go to bed without dinner than to rise in debt. Most of us, however, are in debt at some stage of our lives. If we expect to earn a higher income in the future, we can smooth our consumption over time by borrowing when we are younger. Taking loans to invest in a college education, for example, thus makes sense. Nonetheless, many of those who are at the end of their earning years still have not paid what they owe; more than 65 percent of American families with heads aged 65-74 are in debt. Similarly, estimates by Britain’s Treasury show that up to 40 percent of university graduates may never repay their loans.

So what can be done to reduce the level of personal debt? Standard economic theory suggests that paying back loans based on their interest rates, from highest to lowest, should be preferable since this approach minimizes the total interest paid. However, empirical evidence suggests that this may not always be the case; a study of 6,000 debtors found that, while controlling for debt size, individuals who paid off their debts from smallest to largest were more likely to succeed than those who used other repayment strategies. The authors hypothesize that “[c]onsumers seem to believe that closing off debt accounts, regardless of balance size, is important in motivating them to persist in the goal of eliminating their debts”, which implies that an individual may have a higher probability of repaying loans by focusing on the size of the debts rather than that of the interest rates. The support for this theory is now reinforced in a new behavioural study by Alexander Brown and Joanna Lahey of Texas A&M University.

Read the whole story here.

Simon Hedlin