Macro Roundup

Paper finds no evidence that participation in high school sports has positive spillovers on wages, LFP or college attendance, highly correlated but its all self-selection. Core of paper, "...We examine the extent to which participation in high school athletics has beneficial effects on future education, labor market, and health outcomes. Due to the absence of plausible instruments in observational data, we use recently developed methods that relate selection on observables with selection on unobservables to estimate bounds on the causal effect of athletics participation. We analyze these effects in the US separately for men and women using three different nationally representative longitudinal data sets that each link high school athletics participation with later-life outcomes. We do not find consistent evidence of individual benefits reported in many previous studies - once we have accounted for selection, high school athletes are no more likely to attend college, earn higher wages, or participate in the labor force. However, we do find that men (but not women) who participated in high school athletics are more likely to exercise regularly as adults. Nevertheless, athletes are no less likely to be obese...."
Their evidence

Positive outcomes driven by selection,"...Athletic participation is strongly positively correlated with a number of outcomes—including high school graduation, college attendance, college graduation, wages, exercise habits, and absence of obesity—but we find that this correlation is almost completely due to selection. For most of the outcomes that we consider, we find that even if the correlation between athletic participation and unobservable characteristics is a small fraction of the correlation between athletic participation and observable characteristics, then there is no effect of sports.Across several different outcomes and different samples, we find no consistent benefit from high school sports. However, in a few cases that we discuss below, we do find statistically significant effects from sports participation that are arguably causal...."

“…In Table 1 and Table 2 we present basic descriptive statistics of athletes and non-athletes for men and women, respectively. Each table contains a list of outcomes and control variables from each survey, along with the respective sample means for non-athletes, athletes, and the full sample. We denote with an asterisk sample means of athletes that are statistically different from non-athletes at the 5% level. The descriptive statistics provide a high-level understanding of how selection on observables and unobservables might mitigate the effects of sports. We divide the variables into three categories: background characteristics, school characteristics, and outcomes…Athletes tend to have higher cognitive test scores, be disproportionately white, have parents with higher levels of education, be more likely to co-reside with parents, and come from homes with higher incomes. In short, our basic summary statistics reveal that athletes are strongly positively selected on personal and family background traits….On the school side, athletes are less likely to be absent from school, more likely to be found in private schools and schools with smaller student bodies, more likely to be found in rural schools, and more likely to attend schools that are more racially segregated. These results hold for both men and women, and are in line with existing literature and theory. Namely, overwhelmingly white, private, and rural schools provide more opportunities for student athletes, for whatever reason. Possible explanations include differences in school funding, or that it is statistically easier to make the team at a school with a smaller student body….In addition to observing that athletes have different background and school contexts, we also observe that athletes have very different adult outcomes. They attain higher levels of education, measured either by grades completed or degrees attained. Athletes also earn more as adults: about 15 percent higher wages for men, and about 12 percent higher wages for women. Athletes are much more likely to report exercising regularly. Male athletes are neither more nor less likely to be obese as adults, while female athletes are much less likely to be obese. Athletes of both genders report a higher frequency of alcohol abuse as adults….The results in Tables 1 and 2 are striking in that the different surveys exhibit not only the same sign of sports effects, but also many of the same magnitudes, in spite of the fact that athletic participation is measured quite differently across the three surveys….”
Educational outcomes

“….Tables 4 and 5 contain estimates of α, the effect of sports participation on educational outcomes, from all three surveys, respectively for men and women. The first two rows of the table report OLS estimates, while the remaining rows report RCR estimates. Consistent with the large body of prior research on the topic, as well as the evidence reported in Tables 1 and 2, when we assume that students are randomly assigned to be athletes, we find economically large and statistically significant effects of sports participation on high school graduation, college attendance, and college graduation. Furthermore, the inclusion of explanatory variables dramatically reduces the size of the estimated effect, by more than half in some cases. The estimated effects are slightly smaller for women, but the general pattern is very similar.....thus, the correlation between sports participation and college graduation propensity for men in the NELS:88 is robust to a large amount of selection on unobservables, although we would not reject a null hypothesis of a null effect if λ = 1. On the other hand, for women we find little evidence to support a causal effect of sports participation on the educational outcomes that we examine. For all three of these samples, even if the correlation with the unobservables is only half as much as the correlation with the observables, there is no beneficial effect of sports participation….”

“…Tables 8 and 9 contain estimates for our measures of health and risky behaviors: regular exercise, obesity, and alcohol abuse. In the case of regular exercise, both surveys indicate that male athletes are more likely to participate in regular adult exercise. Interestingly, after controlling for observables, the athlete/non-athlete difference does not change much (and actually increases in the Add Health sample). This result is graphically depicted in Figure 1 (b) for the NELS:88….”

Their takeaway, "...Our largely null results inform the policy debate on high school sports by providing evidence against claims that sports foster skills that improve educational or labor market outcomes. However, despite having very little human capital value, sports may still have a place in high school as a social or cultural activity. We generally confirm the assertion of sports commentator Heywood Hale Broun, who said, “Sports reveals character, it doesn’t build it”

Michael Ransom and Tyler Ransom, "Do High School Sports Build or Reveal Character?Institute of Labor Economics, October 2017, https://docs.iza.org/dp11110.pdf

Note the University of Florida is in Gainesville - so the teacher is likely just teaching the professors kids, “…I wanted to understand how this otherwise average public high school in Florida had managed to win 13 of the last 14 national math championships. The extraordinary thing about the Buchholz math team is how ordinary Buchholz is. It’s ranked 66th among schools in Florida and outside the top 1,000 across the country, according to U.S. News & World Report. But at the annual championships of Mu Alpha Theta, the national math honor society, the Buchholz kids have trouble counting the shiny objects they lug home…The big difference between a traditional honors class and Mr. Frazer’s class is the way students learn to approach tricky problems. He teaches accuracy, but he also teaches speed, since competitive tests are timed. He believes that pattern recognition is a more useful skill—in math, and in life—than cloning questions his students might have seen on their homework the night before. Here’s a basic example involving a famous math problem: What’s the sum of every integer from 1 to 100? You could answer the question with brute force and punch all those numbers into a calculator, but students who are trained to think outside the box would instinctively look for symmetry. They would see that pairs of 1+100 and 2+99 and 3+98 add up to the same total and would simply multiply 101 by 50. They get the correct answer of 5,050 in a fraction of the time. “Everyone has this idea that we practice constantly,” Mr. Frazer said as his students plowed through problem sets on their summer vacation. “It’s not true. We use our time efficiently.”…”

Ben Cohen, "How a Public School in Florida Built America’s Greatest Math Team,"Wall Street Journal, July 14, 2022, https://www.wsj.com/articles/the-secrets-of-americas-greatest-high-school-math-team-11657791000

How a Public School in Florida Built America’s Greatest Math Team

GAINESVILLE, Fla.—It was a sticky Thursday afternoon in the middle of summer break when dozens of teenagers walked through the doors of their high school. One of the world’s most dominant teams was about to start math practice.

There was probability in one classroom and pre-algebra next door, code-breaking down the hall and number theory around the corner. And there were few adults to be found anywhere. The students would spend the rest of the day teaching each other.

I had also come here to learn from them. I wanted to understand how this otherwise average public high school in Florida had managed to win 13 of the last 14 national math championships.

The Buchholz High School math team is a dynasty built by one teacher with a strategy for identifying talent, maximizing potential and optimizing the American system of education.

Will Frazer popped out of his flaming red Corvette as his students were trickling into the classrooms. A bond trader on Wall Street in the 1980s, Mr. Frazer retired young and moved to Florida, where he became a scratch golfer and lived the dream for a decade. Then he got bored.

He took a job at Buchholz coaching golf, switched to teaching math, quickly formed a math team, applied the lessons of his experience in finance and turned a bunch of teenage quants into a fearsome winning machine.

“The difference between what I do now and what I did on Wall Street is that I used to get paid money,” said Mr. Frazer, 63. “Now we get trophies.”

The extraordinary thing about the Buchholz math team is how ordinary Buchholz is. It’s ranked 66th among schools in Florida and outside the top 1,000 across the country, according to U.S. News & World Report. But at the annual championships of Mu Alpha Theta, the national math honor society, the Buchholz kids have trouble counting the shiny objects they lug home.

Buchholz is an outlier in more ways than one. The math team’s run since 2007 coincides with the U.S. slipping to 37th place in the latest international rankings of teenage math performance and China starting to produce more STEM doctorates than American universities for the first time.

The son of an economist, Mr. Frazer believes in competition. He refuses to call the Buchholz math students a club because he wants them to think of themselves as a team. “A club is a social organization,” he said. “A team comes together to win.” And he was out to win.

As he picked the brains of rival coaches whose teams consistently beat Buchholz, Mr. Frazer became obsessed with one question: Why were their kids better at math?

It was because they were teaching math in an entirely different way.

“Here’s the typical model at every school,” he said. “You teach the kids the boring honors stuff during the day, and then you come after school to practice the competitive stuff.” What he meant by the boring honors stuff was the rote memorization and regurgitation that makes Mr. Frazer want to eat his calculator. “Life is not like that,” he said.

The trader in Mr. Frazer saw an inefficiency that he could exploit.

“My thought was I should find out what the best are doing and then figure out what the flaw in the model is,” he said.

With the backing of his school principal and the cooperation of his superintendents, he set about overhauling the Buchholz math department, implementing his own curriculum and hunting for talent at younger ages.

He believes the pipeline for the high school’s math team must begin long before students reach high school, so Mr. Frazer searches for prospects in elementary school and steers them to accelerated math classes in middle school.

“You wouldn’t grab a kid in ninth grade who’s never played football and expect him to be a great high-school football player,” he said. “For most of these kids, this is their football.”

Mr. Frazer’s insight was to connect four levels of education: The kids he scouts in elementary school develop in middle school, compete in high school and take specialized classes from college professors that he brings to Buchholz’s campus. As soon as the system was in place, the team started winning and never stopped.

It turned out there was value in putting a bunch of smart kids in the same room: They feel empowered to make each other smarter.

Many of the gifted kids in his program have parents who work at the nearby University of Florida and push to get on Mr. Frazer’s radar. Others he finds on his own. He tracks down test scores of students in his district, follows the data and recruits high achievers. Some who were discovered by his spreadsheets have since graduated from the Massachusetts Institute of Technology with math degrees and landed on Wall Street themselves.

The mathletes who try out for the team and make the cut are combined into one class section and fly through competitive algebra, geometry and calculus during the school day. Mr. Frazer essentially bends the rules to move faster through harder material and pack more than two years of math into one school year. “I cover everything the state wants me to cover,” he said. “But there is no restriction on covering extra material.”

Here’s a basic example involving a famous math problem: What’s the sum of every integer from 1 to 100? You could answer the question with brute force and punch all those numbers into a calculator, but students who are trained to think outside the box would instinctively look for symmetry. They would see that pairs of 1+100 and 2+99 and 3+98 add up to the same total and would simply multiply 101 by 50. They get the correct answer of 5,050 in a fraction of the time.

“Everyone has this idea that we practice constantly,” Mr. Frazer said as his students plowed through problem sets on their summer vacation. “It’s not true. We use our time efficiently.”

That means taking advantage of an opportunity hiding in plain sight: the summer. Hundreds of students come to school four hours a day, five days a week for a month during vacation. It adds up to 80 hours of extra practice.

There was a buzz inside Mr. Frazer’s classroom when I was there because the teacher at the whiteboard was charismatic—and she wasn’t Mr. Frazer.

Instead, a high-school sophomore named Katie He was instructing middle-schoolers, one of Mr. Frazer’s methods for pulling off a feat that many consider impossible: making math fun.

It’s a universal truth of childhood that nothing is cooler than being around someone a few years older. They may be there because of their parents, but they stick around because of their peers. The younger kids want to impress the students they idolize, and the high-schoolers are compensated for their time in community-service hours. The model is cheap, innovative and wildly effective. It’s as if Billy Beane were running a math team.

Timothy Jin, a rising Buchholz sophomore, wasn’t exactly thrilled by the idea of waking up early for summer math while in middle school. “I obviously thought, like, ‘Oh, it’s going to be another boring math class,’” he said. But he soon realized how wrong he was. Now he’s a teacher at the camp.

Hailey Lin knows how it sounds when people hear about math practice. “But it’s not, like, ‘Oh, my God, I have to do math,’” the Buchholz junior said. She loves the collaborative elements of team competitions and challenging herself against the best of the best. “I thought I was really good at math,” she said. “Then I came here.” (Mr. Frazer described her as one of the best female math students in the country.)

For someone always on the lookout for the latest edge, the pandemic unexpectedly presented Mr. Frazer with one. After the school shutdowns in early 2020, he feared more disruptions in 2021, so he made a curious decision: He resigned from Buchholz—and he kept teaching.

The math team proceeded to win last year’s state and national titles by the widest gaps in the history of the program. The average margin of victory in Buchholz’s previous national titles was 315 points. Last year, it won by 920.

Total freedom from bureaucracy was tempting, but Mr. Frazer missed school enough to return to Buchholz and his old classroom right in time for politicians around the state to pay attention.

“The Buchholz math program should serve as a national model for other schools and districts to follow,” Florida education commissioner Manny Diaz Jr. said.

Buchholz is trying to beat them first. There was math to be done and trophies to be won at the Mu Alpha Theta convention this week in Washington, D.C., where Mr. Frazer bused 70 students for team events and individual subjects ranging from probability and combinatorics (“Prob & Combo”) to differential equations (“Diffy Q”). The star of the team this year happened to be his elder son, Jake, who’s off to college next month, but there were younger whizzes like Ms. He, Mr. Jin and Ms. Lin among the hundreds of students in quiet rooms attacking exams with their pencils.

Mr. Frazer spent years trying to crack the code for making students better at math. He’s still working on it. But one measure of his success is that the best kids on his team are now better than he is.

“Every kid at Alabama is better than Nick Saban at football,” Mr. Frazer said of the legendary coach with the most college national championships. “He just knows how to win better than anyone on the planet.”

By the time their buses were on the road back to Florida, the Buchholz math team had been crowned national champions. Again.

“…Robbed of revenue by price controls, pharmaceutical companies find it where they can—the U.S. The American consumer pays high prices to support research and development that benefits the world. The U.S. invests 44% of the world’s R&D budget for pharmaceuticals, and produces the largest share of patented pharmaceuticals, at any given time accounting for some 40% of the world’s patented drugs…. It has been estimated that if OECD countries lifted their price controls, the number of new pharmaceuticals that would be developed would increase by between 9% to 12% by 2030. This could extend life expectancy of today’s 15-year-olds by up to 1.6 years. To increase prices in price-controlled European countries by only 20% would lead to $17.5 trillion in combined welfare gains for the U.S. and Europe alike….”

Richard Owens, "Why Canada Should Pay More for Medications,"Wall Street Journal, July 17, 2022, https://www.wsj.com/articles/canada-should-pay-more-for-medications-price-controls-oecd-innovation-prescription-drugs-revenue-prices-pharmaceuticals-11658084406

Why Canada Should Pay More for Medications

American lawmakers are threatening to impose price controls on prescription drugs, and it isn’t hard to see why. We Canadians, like others outside the U.S., get our medications at bargain prices—and at the expense of the American consumer, who pays full freight and then some. Americans are tired of free riders, and they deserve a break.

But there’s no way to maintain the vehicle if everyone rides free. U.S. price controls would perhaps benefit consumers in the short term, but at the cost of killing innovation. The only solution is for Canada and other countries to step up and accept their fair share of the cost.

The Patented Medicine Prices Review Board administers Canada’s price controls, forcing drugmakers to sell at a deep discount. Prices of patented pharmaceuticals are almost 3.5 times as high in the U.S. as in Canada. Even so, Canadian prices are among the highest in the Organization for Economic Cooperation and Development—but all non-U.S. members of the 38-country OECD cluster in a narrow pricing band far below America.

Consumers outside America do pay a price for this, as new drugs reach the market more slowly if at all. At any given time, U.S. pharmacies can sell some 90% of available patented pharmaceuticals, compared with about 47% across price-controlled countries (this figure is somewhat higher, 65%, in Canada).

Price controls depress investment for research and development. Out of 56 countries ranked for their contributions to global pharmaceutical innovation, the U.S. ranks first while Canada ranks 27th. A profitable pharmaceutical industry benefits everyone, because R&D spending grows in proportion to profits. More R&D means more new pharmaceuticals, more years of life and health, and less spending on expensive nonpharmaceutical treatments. But the pharmaceutical industry isn’t especially profitable. Automobiles, financial services, information technology and other industries earn far more return on equity.

Robbed of revenue by price controls, pharmaceutical companies find it where they can—the U.S. The American consumer pays high prices to support research and development that benefits the world. The U.S. invests 44% of the world’s R&D budget for pharmaceuticals, and produces the largest share of patented pharmaceuticals, at any given time accounting for some 40% of the world’s patented drugs.

If a country exported a product at a below-market subsidized price to benefit its own producers, it could face a dumping complaint to the World Trade Organization. Trade law has no remedy for price controls by importing countries. But the U.S. could make proportional price reduction for the U.S. consumer a quid pro quo for allowing other nations to import its innovative pharmaceuticals. It could impose export fees equivalent to some or all of the lost wholesale pricing attributable to price controls.

To lower prices again, countries with price controls would have to get together to effect an equitable sharing of price increases in their more open markets. The U.S. could also bring foreign drug producers to support local price reform by implementing a rule requiring that no drug in the U.S. sells for more than it sells in its exporting jurisdiction.

The cost of low drug prices is high for everyone. It has been estimated that if OECD countries lifted their price controls, the number of new pharmaceuticals that would be developed would increase by between 9% to 12% by 2030. This could extend life expectancy of today’s 15-year-olds by up to 1.6 years. To increase prices in price-controlled European countries by only 20% would lead to $17.5 trillion in combined welfare gains for the U.S. and Europe alike.

The world desperately needs international pharmaceutical pricing reform, but there’s a collective-action problem. The cost for Canada or any other single nation to go cold turkey on price controls would be prohibitive. But if nations act in concert, pressure on the U.S. market could be relieved and price increases in local markets managed. Canada and other OECD countries aren’t poor. It’s time for us to pay our share.