Philanthropy Paradox

September 5th, 2016 by Abbas

Educational philanthropy is a prime example of human generosity and the will to help others. It is especially fruitful when geared into the education and productivity of the youth, and it perhaps seems luring as a break-down of the cynical premise of ‘rationality’ that is the life-blood of conventional economics.

But can good-natured, well-intentioned philanthropy not do the good it is meant to do? Could it even lead to elitism and inequality? Could it be… harmful? On the surface, one is inclined to say no (especially as a donor), but a deeper look is warranted:

Education is, of course, as a merit and public good, funded partly by the government. The government makes special provisions for students by paying a hefty chunk of their tuition, or offering cheap, easily repayable loans; however, private philanthropy is growing as a much-relied-upon revenue stream, which many universities especially in the United States are leaning on, in the wake of declining public-sector spending on education. Another critical truth about the industry, that goes often underappreciated, is that it is as strong as its weakest link. This is to ensure that students from lower-income backgrounds, with fewer resources to expend on their education, can still consume enough resources to harness their abilities well, and become productive members of society.

The first to set an impression in this matter was Hank Rowan, who, in the spring of 1992, made a donation to Glassboro State College (now Rowan University) in New Jersey, of $100 million, the largest donation of its time. It was meant to rescue the college from bankruptcy, and to act as a reliable springboard for future engineers of the country. He was lauded a hero, and had a statue dedicated to his generosity after his death in 2015. This set the stone rolling for educational philanthropy. And people were inspired to followed his example.

But did they?

As of now, the largest donations are attracted to some of the most elite and expensive universities, e.g. in the last year, the University of Oxford received the largest donation of £75 million. Is this the same as Hank Rowan’s charity to the Glassboro State College?

This can be answered by looking at what the money is being spent on. Each marginal dollar that was donated by Rowan bought necessary technology for students of the engineering department, allowing a dramatic increase in students’ learning and productivity. The marginal impact for each dollar donated, however, is much smaller for universities with gargantuan endowments to begin with, with shrinking room for improving their educational standards. The improved quality, in fact, may even set a precedent to demand more fees in tuition, making such institutions more elitist. This would decrease the ability of lower-income students to access higher quality education.

Philanthropy is not evil: it has the capability for great good, but it can be misdirected. Instead of gifting the well-endowed, perhaps it’s time to refocus on the smaller, less-resourced institutions, who can do so much more with that money.

Eight more parody songs that actually teach you some economics

April 25th, 2016 by econ-network

Following on from our favourite videos from the Rockonomics student competition, here are some picks from an Advanced Placement course in Economics in the US, where students have worked economics lyrics into popular songs.

Monopoly is the Way to Go

If there’s only one seller of a product and new firms can’t enter the market, competition can’t drive prices down, as explained in this video after some nice black-and-white scene setting. Being a monopoly is nice work if you can get it.

Money quote: “Monopolistic competition, oligopolies / neither of them are efficient allocatively”

Counting Prof

Looking at the same topic from a different angle, this is so well-produced it looks like a proper music video. Read the rest of this entry »

Economics graduates are in the money

April 15th, 2016 by econ-network

Click on the graph to see it full size

Anyone considering an Economics degree will find good news in research announced this week by the Institute for Fiscal Studies. It is a massive study, looking at what 260,000 university graduates in England are earning, ten years after graduating.

The IFS found “substantial” differences in the money people were earning, depending on the subject they took at university. Economists are most likely to be the top earners, by a clear margin. Read the rest of this entry »

Competition and Living Standards: the Moroccan Software Engineer

February 26th, 2016 by econ-network

For this story about the effect of economics in one person’s life, we thank guest author Elena Fernandez Prados for sharing an extract from her new book, Economics through Everyday Stories from around the World. ISBN 978-1523296415

Rachid Benchekroun is a software engineer from Casablanca, Morocco’s largest city. Rachid works for a technology company developing computer games and lives in an elegant villa around the corniche (waterfront promenade), one of Casablanca’s fanciest neighborhoods. But life has not always been easy for Rachid, and at the age of twenty-five, he feels that he has come a long way in life.

Rachid grew up in Casablanca’s suburbs, in a small one-bedroom apartment that he shared with his parents, his three siblings, and two of his cousins from the village. Abdel Karim, Rachid’s father, was a mechanic, while his mother, Fatima, was a homemaker. From an early age, Rachid learned the value of hard work. He attended school in the mornings and helped his father in the garage in the afternoons, oiling engines and pumping tires. At night, Rachid did his school homework diligently under a kerosene lamp. “Study hard, young boy,” his father often reminded him, “for it is the only way that the son of a mechanic from Chefchaouen can become someone in life.” Read the rest of this entry »

Eight parody songs that actually teach you some economics

September 18th, 2015 by econ-network

The Rockonomics competition, run by a group of US universities, gets students to write economics lyrics for popular songs and raps, and to make videos for them.

Some of these are pretty good ways to stick an economic idea in your head. Read on for our eight choices from the last few years of the competition.
Read the rest of this entry »

Double dip recession: time to panic?

April 27th, 2012 by eoghan

Figures this released by the ONS on this week show that the UK has officially entered a recession; the second recession the UK has suffered in three years. David Cameron has said that these figures were very disappointing while Ed Miliband has called them catastrophic. But how catastrophic is a double dip recession for the UK? There are a number of reasons to doubt the media’s, and some politicians, doomsday predictions.
Read the rest of this entry »