Research in Applied Economics
An Introduction to the Module 2006/7
IAN WALKER
Module Leader 2005/6
S2.109 i.walker@warwick.ac.uk
Idea behind the module
• Economics gets everywhere
– and you have seen only a small fraction of it
• This is your chance to dictate the content of your
studies
• Gives you a chance to apply your new skills in
economic analysis
• Allows the opportunity to develop analytical and
presentational skills
– Shows that you have good non-cognitive skills
• Gives you a topic that you can talk about in depth
and with enthusiasm
– in interviews
Components of the module
• Lectures in term 1
– To provide guidance on methods, data and software
• Library
– “Information skills” support
• Classes in terms 1 & 2
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To provide generic guidance within each topic area
To give individual feedback
To promote and monitor individual progress
No help after end of Term 2 – “tough love”
• Project (80% project - 20% preparatory work)
– 5000 words
– Deadline: start of term 3 in 2006/7
The RAE work programme
• Check feasibility of idea (this summer)
• Make initial presentation (about week 5)
– Get feedback and develop idea
• Present lit review (about week 9)
– Decide on the big issues and your “angle”
• Data presentation (about week 12)
– Demonstrate that useful data is accessible and you
understand it
• Final presentation (about week 18)
– Fine tune during Easter vacation
Staff
• Module leader and lecturer
– TBA
• Library staff
– Help with textual databases and e-collections
• Tutors
– Broad range of expertise in applied research
– Active researchers in the field
• Often away, email for appointments
• Tech support (usually a PhD student doing
applied research)
– Guidance with getting data, using software, etc
What is an RAE project?
• Your OWN work, and your OWN topic
– NOT an essay, NOT a survey
• Has to have some economic content
– Not just an econometric/statistical exercise
• Has to have some value added
– May even be original
• Not necessarily regression analysis
– We strongly encourage diversity
– “theory”, “simulation”, “policy evaluation”, “experiment”,
“meta-analysis”
• Emphasis is on evaluation
– Other’s work, your own work, what you might have done
What do you have to do?
• Think about what you might like to do – before Oct
• Attend (about 18) lectures in term 1
– Source of ideas, stimulation, basic skills, and guidance
– All notes available on RAE website
• Attend information skills sessions in term 1
– Full-text (JSTOR etc), lit databases (EconLit, SSCI etc)
• Attend classes in terms 1 and 2
– Make presentations
• Preliminary idea, Lit review, Data availability, Results/findings
• Write up project during Easter vacation
– critically appraise lit, acquire data, use stats
packages/spreadsheets, evaluate your OWN work
Examples of recent topics
• A “reciprocity” experiment in a restaurant
– Simple critique of important neoclassical economics
idea
– No econometrics, simple “controlled” experiment
• The effect of “winter fuel allowance” on fuel
expenditure
– Microeconometric analysis exploiting “natural
experiments” in policy reforms
– Test of “behavioual economics”
• Effect of cocaine prices on crime rates
– Time series analysis
– Elasticity, deadweight loss, cointegration etc.
More examples
• How gas suppliers could use weather forecasts to
hedge risk
– Clever application of financial futures model
• Economic determinants of sleep
– Opportunity cost of time
– Econometric analysis of UK Time Use Survey data
• Effects of Disability Discrimination Act
– Simple labour economics
– Analysis of wages of disabled workers in large and small
plants before and after policy enacted - difference-in
differences
• How does wealth affect longevity
– Analysis of large UK panel dataset
Yet more examples
• The income elasticity of labour supply
– Diff-in-diffs exploiting the Child Tax Credit
reform
– Looks at labour supply of mums before and
after reform compared to non-mums
• Wages of immigrants
– Simple econometric analysis of General
Household Survey data
• Gender effects in dictator games
– Lab experiment on students
Fertile areas
• Wage determination
– LFS data is large and available 93-03
– Lots of ideas to focus on
• Education, discrimination, regions, disability, ethnicity,
immigrants, language skills, BMI (in BHPS and some GHS)…..
– Lots of techniques to try
• “quantile” regression, selectivity model, endogeneous “treatment”
• Expenditure patterns
– FES (now called EFS) is large and available 78-03
• Very detailed data, income variation, relative price variation
– Possible angles
• effect of a “fat tax”; effect of opening hours variation on alcohol
spending; purchases via internet; credit card use; regional
differences; ethnic differences; child gender effects……..
More fertile areas
• Welfare reform and policy evaluation
– Build a spreadsheet model to analyse some issue
• Pension reform?
– Evaluation of some recent policy
• Educational maintenance allowance?
• Transport economics
– Elasticity of demand for petrol, travel to work, commuting
• Health economics
– Effect of exercise on health, elasticity of supply of nurses,
effect of AIDS on growth, effect of prescription charges
• Social issues
– “Social” capital (GHS 02), friendships (BHPS), happiness
(BHPS), parenting (BHPS), neighbourhood renewal
(ONS N’hood data), do step-children do worse, time use
What should you do – NOW ?
• Identify your idea (or, at least, your general area)
• Think about your area of interest:
– Monetary, Financial, IO, Labour, Public, Development ..
– Health, Environment, Sport,, Culture, Transport ..
• Perhaps consult your Personal Tutor?
• Identify the BIG issues in your topic
– The Economist, New Scientist, Cosmopolitan………
• Think narrow, think deep
• Browse the literature
– Big journals (AER, JPolEcon, QJE, EJ, ….)
– Applied journals (JoLabEcon, JoHealthEcon …)
– Survey journals (JEconLit, JEconPersp, JEconSurv…. )
Ensure you have minimal IT
literacy and presentational skills
• Sign up for
Warwick
Skills
Certificate
modules
• And work
through
Key Skills
On-line
Consult RAE website
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Links to tutors
Advice on how to do well (and badly)
Data and software advice
Links to useful sources of info
ppt’s and pdf’s of all lectures
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ppt’s contain “live” (clickable) links
pdf’s are in “handout” format for economical printing
Updated week by week
Normally available a few days ahead of lectures
Check it out
http://www2.warwick.ac.uk/fac/soc/economics/ug/modules/3rd/ec331/details/docs/
What you have to do early next
term
• Sign up for an RAE tutor
– Check website class times, tutor areas of expertise
• Ensure easy access to a PC (forget the iMac)
– Slow is OK, 256mb+ is good if you use “micro” datasets
– Broadband internet access is useful for downloading
– Start practising “safe research” - lock it up, and back it up!
• Consider buying some econometrics software
– PCGive, SPSS …….. EViews …. STATA
Helpful reading
• Know some basic statistics/econometrics
– J.M. Wooldridge “Introductory Econometrics”
– J. Stock and M. Watson “Introduction to
Econometrics”
• John Kay’s “The Truth about Markets”
– http://www.thetruthaboutmarkets.com/
• Steve Levitt’s “Freakonomics”
– http://www.freakonomics.com/
Summary
• You are responsible for you own progress
– You CAN do very well
– But you can choose to do very badly
– The harder you work the more help your tutor will be
• If you want to do well - time management is very
important
– start TODAY!
• Data is generally much harder to get than you
might imagine
– Think about this as soon as possible
• God made this summer “vacation” for RAE work
– Next summer is for Ibiza!