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A Managerial Perspective on Underbanked Entrepreneurs: Barriers to Lending and Community Partnership Solutions
No full textThe unique barriers confronting entrepreneurs in low-income communities in obtaining debt capital in the United States remain unclear. Through in-depth interviews with financial lenders and technical assistance providers representing startup support organizations, two sets of barriers to financial lending are identified: 1) limited loan applications, possibly due to distrust in traditional financial lenders, and loan denials related to low financial stability and literacy, and 2) systemic challenges with the U.S. traditional financial lending system, and its startup support system. Community-based partnership solutions for these barriers are presented with theoretical and practical implications
Coase, Thaler, and Behavioral Economics: Methodological Considerations
No full textIn their experiments to measure the endowment effect in market settings, Kahneman, Knetsch, and Thaler (1990; hereafter KKT) assessed the assumption of zero transaction costs associated with the Coase theorem. Their study recruited a sample of advanced undergraduate economics students who were placed in a market setting using coffee mugs as real-world goods, under conditions in which there were zero transaction costs. Their results suggested that an endowment effect lowered trading volume, which should not have occurred if Coase theorem worked in practice. We reexamine the research design employed by KKT, as well as their study’s statistical analysis and results
Changes in Math Prerequisites and Student Performance in Business Statistics: Do Math Prerequisites Really Matter?
No full textWe use a binary probit model to assess the impact of several changes in math prerequisites on student performance in an undergraduate business statistics course. While the initial prerequisites did not necessarily provide students with the necessary math skills, our study, the first to examine the effect of math prerequisite changes, shows that these changes were deleterious to student performance. Our results helped convince the College of Business to change the math prerequisite again beginning with the 2008/2009 academic year. Thus, this study is also the first to actually help strengthen math prerequisites and improve student performance in business statistics
A Probabilistic Model for Measuring Stock Returns and the Returns from Playing Lottery Tickets: The Basis of an Instructional Activity
No full textMany individuals indicate that playing the lottery is a legitimate way to generate wealth, including retirement savings. We offer a methodology designed to create interactive learning activities comparing the results of playing the lottery versus investing in stocks to create wealth. To emphasize the stochastic nature of investment and lottery returns, we employ a Monte Carlo simulation that draws from probability distributions created from lottery payoffs and historical stock returns. The model results demonstrate, visually and numerically that stock investments generally outperform the lottery in generating wealth
Portfolio Performance Evaluation Benchmark: A Note
No full textJones and Swaleheen (2014, this journal) examine the performance of an equity portfolio in a student managed investment fund and document the outperformance of the portfolio relative to the S&P 500 index on an absolute basis. We show that the apparent outperformance of the portfolio is due to using the index without its dividend component. Once we use the S&P 500 total return as the benchmark, the outperformance of the equity portfolio disappears. We explain why the S&P 500 total return should be used in this case, and propose and justify two alternative proxies for the S&P 500 total return
Teaching the Law of Supply Using Karaoke
No full textThis paper describes an active-learning strategy for teaching the law of supply using karaoke. Unlike the law of demand, which is second nature by the time students reach college, the law of supply is less familiar. If you are unsure about this claim, poll your class to see how many students have tangible experience running a business. Due to this lack of familiarity, we deploy karaoke to illustrate the fundamental nature of the supply curve, along with the difference between movements along the supply curve and supply shifters. We also provide extensions and a number of variations of this method for interested educators. This work is similar to Kraznoshon’s (2013) use of Beyonce’s Irreplaceable to help students learn the law of demand
Classroom Analysis of How to Value Shares of Public Corporations: A Pedagogical Endeavor Including Earnings and Dividends Expectations Formation and Hybrid Modeling
No full textThis paper endeavors to render the evaluation of shares in publicly-traded corporations simpler and broader by: (a) developing a more useful and understandable version of the application of price-earnings ratios to stock valuation; (b) acknowledging the existence of the price-dividend ratio and its applications; (c) demonstrating formally how future dividends expectations and future earnings expectation can be formed; (d) expounding upon the dividend discount and earnings discount models and how a hybrid model can be formed; and (e) elaborating how the dividend discount model, the earnings discount model, and the price earnings framework can be synthesized into a hybrid model
Dispelling the Pessimistic Bias
No full textThis paper provides resources and methods for confronting and refuting “the pessimistic bias.” This bias was identified by Bryan Caplan in The Myth of the Rational Voter: Why Democracies Choose Bad Policies (2007.) Caplan defines the pessimistic bias as “a tendency to overestimate the severity of economic problems and underestimate the (recent) past, present, and future performance of the economy.” It originates in the gap between public perceptions and historical reality. Professors and students of economics should: (1) be aware of the problem, and (2) have tools and methods to address this commonly-held bias
Clickers: Performance and Attitudes in Principles of Microeconomics
No full textClickers are one tool available to classroom instructors seeking new ways to engage students. There has been extensive research in the sciences studying the effectiveness of using clickers in the classroom but very little within the economic discipline. This study analyzes the relationship between using clickers for participation only and using clickers for graded daily quizzes in Microeconomics. Student attitudes concerning clickers are also investigated. While no significant difference is found in final course grade, results show that students perform best on daily quizzes taken with paper and pencil. Additionally, students overwhelmingly enjoy clickers in the classroom regardless of usage
