Economics Commons^™

An Analysis Of The Impact Of Team Payroll On Regular Season And Postseason Success In Major League Baseball, Noah L. Schwartz, Jason M. Zarrow

Undergraduate Economic Review

Major League Baseball, like other American professional sports, has become a multibillion dollar industry. The institution of free agency has led to the escalation of payrolls and altered the make-up of rosters by dramatically reducing owners’ monopsony power. The ability of large market clubs such as the New York Yankees to compete continually for the game’s greatest prize illustrates the power of the dollar. This paper examines four distinct periods from 1977 to 2008 in order to assess the influence of pecuniary advantages on regular season and postseason outcomes. Payroll exerts great influence in the regular season, but not in …

High School Graduation Rates In The Metro-Detroit Area: What Really Affects Public Secondary Education, Thomas A. Wilk

Undergraduate Economic Review

Education is essential to the future productivity of workers in the Metropolitan Detroit area, so determining what impacts high school graduation is vital to predicting the future success of our economy. This research investigates what key aspects in our society affect the high school graduation rate: poverty level, violent crime rate, student body, class size, local school taxes, and standardized test scores. Results from multiple regressions using school district and city data from the CCD and FBI suggest that poverty levels and violent crime in the Metro Detroit area significantly, negatively influence high school graduation rates. Reforms to public policy …

Examining Tufte's Political Business Cycle Under An Adaptive Expectations Framework, Anna Konradi, '09

Honors Projects

Given that the executive branch's party desires reelection and that the economy is an important variable in the eyes of the electorate, to what extent has the president and his party been able to exert influence over economic variables in the months preceding an election? Much of the existing literature suggests that there may be an important cyclical pattern between the four-year election cycle and economic variables such as real GDP growth and real disposable income. Using data from the Council of Economic Advisors and the Presidential Elections dataset, this paper finds moderate evidence for the existence of a political …

Determining The Future Income Of College Students, Paul Oehrlein, '09

Honors Projects

Many people invest a lot of money in order to go to college with the hope that they will eventually be rewarded with higher salaries. This paper attempts to determine what aspects of college are most important in determining the future income of students. In particular, this paper studies whether GPA is an important determinant of income as well as whether some majors are better investments than others after controlling for other factors. In addition, the effect of math and verbal ability on income and how they interact with different fields of study are studied. The data comes from the …

Explaining Human Influences On Carbon Dioxide Emissions Across Countries, Karin Peterson, '09

Honors Projects

Global climate change is a vital issue facing the planet today, posing significant risks to both humans and the natural environment. This dangerous phenomenon is largely caused by the release of carbon dioxide into the atmosphere, resulting from such activities as energy production and vehicle travel This paper examines the factors leading to differences in carbon dioxide emissions among countries, including income, energy use, and government institutions. A crosssectional regression indicates that an inverted-U relationship exists between per capita income and carbon dioxide emissions, but that the turning point at which pollution begins to decrease occurs at a very high …

Predicting Major League Talent Through The First-Year Player Draft, Kevin Slattery, '09

Honors Projects

The Major League Baseball first-year player draft is a relatively unexplored topic. Until two years ago it was not even televised, even though other major spoils drafts like basketball and football are major television events. I predict the probability of reaching the major leagues and the probability of a player "making it big" in the major leagues for a player drafted based on a series of variables, like draft position, whether a player is lefthanded, and the schooling the amateur has received. This should help a team determine which players are most risky, and which players are most likely to …

Adopted Children"S Outcome As Young Adults In Regards To Educational Attainment And Income, Nicole K. Spear, '09

Honors Projects

This study explains the differences between the outcomes for children adopted by the age of two in comparison to biologically raised children using the National Longitudinal Survey of Youth. It analyzes the educational attainment and income earned through a competing effects framework. The Family Background Effect measures the positive effects caused by higher than average socioeconomic status of the average family with adopted children. The Family Background Effect contrasted with the negative Adoption Effect caused by a number of different factors that could work against an adopted child. Using linear regression analysis, the study finds that the Family Background Effect …

Length Of Contracts And The Effect On The Performance Of Mlb Players, Katie Stankiewicz, '09

Honors Projects

The goal of any professional athlete is to receive a multi-year contract that guarantees them a salary for multiple years. However, a concern that fans, coaches and owners all share is that when a player receives a multi-year contract they may have a strong incentive to shirk. Shirking is when a player purposely does not perform to the best of his ability and may occur when a player has a guaranteed salary. The goal of this paper is to determine if a Major League Baseball player with a multi-year contract will show any pattern of shirking throughout the contract. Each …

An Economic Analysis Of The Effects Of Steroids On Season Best Performances In Track And Field, Allison Fisher '08

Honors Projects

This paper investigates the relationship between steroids and an athlete's ability to run a season best time in track and field. Certain event groups have seen a faster drop in season bests than others. Medical research indicates which of these event groups (sprinters, distance, throwers, jumpers) would most benefit from steroids. I hypothesize that steroids allow sprinters to improve on their season bests more than other event groups. This hypothesis is based on a production theory from the economics literature where inputs such as coaching, facilities and steroids produce season best performances. Using ordinary least-squares regression, I use a dummy …

Stock Index Pricing With Random Walk And Agent-Based Models, Scott N. Swisher Iv '08

Honors Projects

The objective of this work is to empirically test the EMH (efficient market hypothesis) and compare its results to those of a viable agent-based competitor using computational simulation. The models are not directly fit to the data; random walk and agent-based methods of stock price determination are statistically compared using the criteria of stationarity, randomness, and autoregressive behavior. The agent-based approach used, styled the "ant trader" model, is based on the ant model established by Kirman in his 1993 work "Ants, Rationality, and Recruitment". Daily returns of the Hang Seng and Nikkei 225 indices are used over the periods 1987-2007 …

Determinants Of Crack Cocaine Trial And Addiction, Elizabeth Taylor, Robert Leekley, Faculty Advisor

John Wesley Powell Student Research Conference

No abstract provided.

Brazilian Ethanol And U.S. Industrial Organization: An Analysis Of Bilateral Trade Barrier Removal, Michael X. Feeney '08

Honors Projects

With rising petroleum costs and a plethora of other influences causing international ethanol demand to grow at an unprecedented rate, discussion of trade liberalization has become an important point of debate for the ethanol production industry. Although there have been many studies on the results of the removal of trade barriers there has been little emphasis on the potential impact it would have on domestic industrial organization. This paper looks to analyze the possible effects of ethanol trade barrier removal between Brazil and the United States on U.S. industrial organization through evaluation of the removal's ,influence on incentives for consolidation …

Determinants Of Crack Cocaine Trial And Addiction, Elizabeth Taylor '08

Honors Projects

This paper examines how socioeconomic factors contribute to initial use of crack cocaine and to eventual addiction. The paper focuses on two specific questions: what characteristics influence crack cocaine use initially and why do people continue to use crack cocaine? In order to answer these questions the paper utilizes basic supply and demand theory as well as general physiological theory on drug dependence. These theories, coupled with previous literature, suggest characteristics that would increase the probability of a person trying crack cocaine. However they also indicate that once a person has become addicted, these characteristics no longer matter. Ordinary Least …

Achieving Proficiencies In Economics Capstone Courses, Michael Seeborg

Scholarly Publications

This paper argues that capstone courses in economics should be integrative experiences that require students to demonstrate six core proficiencies. The capstone economics senior seminar at Illinois Wesleyan University is used as an example of how a capstone course that requires completion of an original research paper might achieve these proficiencies. Also, carefully designed co-curricular activities, such as student-edited undergraduate journals, and participation in undergraduate research conferences are recommended as complements to capstone research courses.

Nafta Toward A Common Currency: An Economic Feasibility Study, Kelly Hugger

Undergraduate Economic Review

The recent emergence of the Euro, combined with the completion of a decade of North American Free Trade Agreement (NAFTA) has sparked interest in adopting a common currency for North America. This study examines the likelihood that Canada, Mexico, and the United States will adopt a common currency under fixed exchange rate regimes. The benefits and costs of a common currency are explored using the theory of optimum currency areas (OCA). Empirical research focuses on several variables including intra-regional and intra-industry trade, trade openness, gross domestic product, inflation rates, interest rates, economic growth rates, business cycle synchronization, factor mobility, fiscal …

The Effect Of Changes In The Federal Funds Rate On Stock Markets: A Sector-Wise Analysis, Kunaey Garg '08

Honors Projects

The federal funds rate is an indicator of monetary policy that investors in the stock market scrutinize very closely. This paper determines the relationship between changes in the federal funds rate and sector stock indexes. The paper goes on to determine why particular sectors are more sensitive to interest rate changes than others. Weekly returns of the Dow Jones ICB classified financial, energy, utilities, materials, industrials, consumer goods, consumer services, information technology, health care and telecommunications sectors are analyzed using separate OLS regression models for each sector. The results show that the utilities, financials, telecom and basic materials sectors are …

The Effect Of Gender Inequality On Growth: A Cross-Country Empirical Study, Quentin Brummet '08

Honors Projects

Recently, a large amount of economic literature has focused on the empirical determinants of economic growth, especially the impact of human capital. These studies have established that human capital is a very significant determinant of growth. However, relatively few studies have examined the effect of misallocation of human capital on the basis of gender. Furthermore, those that study gender inequality consider different measures of inequality, different control variables, and different data sets. This study attempts to investigate the robustness of these previous findings. Using OLS regressions and more recent data than past studies, the results highlight the fact that cross …

The Effect Of Changes In The Federal Funds Rate On Stock Markets: A Sector-Wise Analysis, Kunaey Garg

Undergraduate Economic Review

The federal funds rate is an indicator of monetary policy that investors in the stock market scrutinize very closely. This paper determines the relationship between changes in the federal funds rate and sector stock indexes. The paper goes on to determine why particular sectors are more sensitive to interest rate changes than others. Weekly returns of the Dow Jones ICB classified financial, energy, utilities, materials, industrials, consumer goods, consumer services, information technology, healthcare and telecommunications sectors are analyzed using separate OLS regression models for each sector. The results show that the utilities, financials, telecom and basic materials sectors are the …

The Impact Of Foreign Aid On Development And Aggregate Welfare In Developing Countries, Todd J. Kumler '07

Honors Projects

Over one billion people across the globe live in extreme poverty, struggling to survive on less than one U.S. dollar per day. The persistently low levels of aggregate welfare and human development in developing countries have recently caught the attention of many politicians and social observers. As the developed nations and multinational organizations of the world are called upon to increase development assistance to these impoverished countries, a question must be asked: Will increased foreign aid effectively raise human development in developing countries? While many studies have analyzed the impact of development aid on economic growth in developing nations, few …

Analyzing The Relationship Between Change In Money Supply And Stock Market Prices, Biniv Maskay '07

Honors Projects

This paper examines the relationship between change in the money supply and the level of stock prices. This paper also dichotomizes change in the money supply into anticipated and unanticipated change and analyzes each of their relationships with stock market prices. Competing theories exist on how change in the money supply affects stock prices. The real activity theorists argue that change in the money supply and stock prices are positively related, where as the Keynesian economists argue otherwise. This study finds a positive relationship between change in the money supply and stock prices, agreeing with the real activity theorists. Economists …

The Effects Of International Diversification On Portfolio Risk, Angela Agati '07

Honors Projects

With the growing global economy, understanding international stock market correlations has become a vital instrument for investors wishing to diversify their portfolios on a global basis. For investors to have effective international portfolio diversification it is important to determine the countries whose stock prices move together, those whose stock prices move in opposite directions and those whose stock prices are unrelated all together. In order to analyze the impact of stock market correlations, this paper will focus on stock market indices in the U.S., Shanghai and the European Union. According to theory, maintaining portfolios primarily in highly positively correlated markets …

Measuring The Impact Of Urban Amenities On Average Wages In Metropolitan Areas, Benjamin Burry '07

Honors Projects

This paper seeks to quantify the impacts of climate, crime, population density, and travel time on median hourly wage in urban areas using the hedonic approach. In accordance with theory of utility equalization across urban areas, worker ski11level, job composition, and intercity cost of living differences are held constant. This study's sample size consists of thirty-one metropolitan statistical areas in the continental U.S. with a population greater than five hundred thousand. Results support a significant impact ofurban amenities on wages.

Exploring The Effects Of Age At Arrival And Region Of Origin On The Earnings Of Immigrant Physicians In The U.S., Matthew Goergen '07

Honors Projects

Current projections, as indicated by the 2000 Census, suggest that racial and ethnic minorities will outnumber non-Hispanic whites in America by the year 2050. Clearly, immigrants are vital components of the U.S. labor force and crucial in helping drive the domestic economy. Foreign-born workers occupy all niches of the labor market, from low-skilled workers to physicians, yet there still exists a disparity in wages between immigrant and native workers.

Exploring The Causality Between The Pollution Haven Hypothesis And The Environmental Kuznets Curve, Brian W. Jbara '07

Honors Projects

In recent years, increased economic development, globalization, and liberalization of international trade have been linked by economists and environmental scholars as possible causes for specific trends in pollution. One of the most studied and controversial hypotheses is the Environmental Kuznets Curve Hypothesis (EKC), which states that a country's pollution concentrations rise with development and industrialization up to a certain point, after which they fall again as the country uses its increased affluence to reduce pollution concentrations again. If true, plotting pollution concentrations against income per capita will yield an inverted V-the EKC. Another controversy is the manner in which the …

The Extended Heckscher-Ohlin Model: Patterns Of Trade Between The U.S. And China, Mark Clements

Undergraduate Economic Review

Though there have been many attempts to extend the Heckscher-Ohlin model in order to account for empirical data, I intend to examine John Romalis’ model of factor proportions and commodity structure. The purpose of this paper is to examine Romalis’ model to see if it is supported by empirical data on trade between China and the United States. In order to do this, I will use data from the 2000 and 2005 U.S. Census trade data CD-ROM to determine if Romalis’ extended Hecksher-Ohlin model of international trade can explain the U.S.-China pattern of trade.

Is Selling Sex Good Business? : Prostitution In Nineteenth Century New York City, Ida Bastiaens

Undergraduate Economic Review

This study examines the impact of red light districts on the New York City’s land values for the years 1867 to 1870 using the monocentric model and bid-rent function as the foundation for the analysis. The results suggest that the Tenderloin red light district is a positive amenity, while the Bleecker and Washington Square red light district is a disamenity. The history of prostitution in New York City provides valuable insight into causes for the differences in the marginal impacts of prostitution on Manhattan’s urban environment. In the end, despite prostitution’s ongoing profitability well into the twentieth century, the strong …

Team Success And Personnel Allocation Under The National Football League Salary Cap, John Haugen '06

Honors Projects

A pre-Super Bowl article published in the Wall Street Journal labels the personnel spending and business model of the Seattle Seahawks, the National Football Conference representative to Super Bowl XL, as "extraordinary." Much to the surprise of the author, "they plucked their entire defense from the discount bins" and still made it to the Super Bowl (Walker 2006). Seattle spent far less on its defense in comparison not only to their Super Bowl opponents, the Pittsburgh Steelers, but compared to every single other NFL team. They valued "underpriced or underappreciated players who were as long on character and potential as …

Effects Of The Federal Income Tax Structure And Social Security On The Changing Us Family Composition, Adam M. Gray '06

Honors Projects

From dual-earner, married couples, to opposite and same-sex cohabitation, America's family structure, lifestyles, and attitudes have been changing in recent years. This paper provides a framework of understanding how families interact and make economic decisions. It examines whether external and internal benefits to family formation exist. The government should develop policies are both equitable and efficient depending on what benefits exist for society, if any. Currently, one of the biggest gains married partners make occurs within the Federal Income Tax and Social Security Systems. However, this structure was created at a time when families were very traditional-a working husband and …

Economic Development And The Gender Wage Gap, Sherri Haas '06

Honors Projects

Economic inequality between men and women is an important problem deserving of in-depth study because of the large number of people it affects. Not only do current gender wage gaps affect women, they also likely affect their children and future generations. A number of studies have found evidence that women tend to spend income differently then men, with greater shares being put back into the household and more equally allocated between children of both sexes (Blau, Ferber, and Winkler, 2001). This in tum improves equality between genders if both girls and boys receive similar benefits and education.

This study will …

The Gender Wage Ratio: Does It Differ Between Races?, Britanny Kirkpatrick '06

Honors Projects

In 1964 the Civil Rights Act made it illegal for employers to discriminate against individuals on the basis of race, color, religion, sex, and national origin (Coleman, 2003). This act was passed to help bring equality to men and women of all races; however, a gender wage gap still exists. Up until the 1970s it was estimated that women made only 60% compared to their male counterparts in earnings. Since then the wage difference between men and women has continually decreased due to the large number of women entering the labor force, the outlawing of gender discrimination, and an increase …