Description
Professor Tô
Boston University
EC 508
Problem Set #5
Spring 2022
Due MONDAY 03/07/2022, by 8am ET on Blackboard
Last Name:
First Name:
Group members with whom you worked:
Note: The solutions you submit for this problem set should contain:
* Your independent writeup for questions 1–2
1
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distributed outside the class under any circumstances.
Professor Tô
Boston University
QUESTION 1 – DOES FEDERAL STUDENT AID RAISE TUITION?
In 2008–2009, for-profit educational institutions, as tracked by the US
Department of Education, produced 42 percent of vocational
certificates, 18 percent of associate’s degrees, 5 percent of
bachelor’s degrees, and 10 percent of master’s degrees. Not only do
for-profits account for a substantial fraction of each of these
programs, they have also grown enormously in the past decade. The fall
enrollment fraction accounted for by the for-profits increased from 4.3
percent in 2000 to 10.7 percent in 2009.
Under Title IV of the Higher Education Act of 1965, the federal
government provides grants and (subsidized and unsubsidized) loans to
postsecondary students. Title IV eligible institutions (which we will
term T4 institutions) may, and occasionally do, receive up to 90
percent of their revenue from federal aid programs.
To be Title IV eligible an institution must have existed for at least
two years, have received accreditation from a US Department of
Education approved accrediting agency, and be licensed or authorized by
the state in which it operates. A T4 institution must have at least one
program that is full time (generally 900 clock hours), but some of its
shorter programs can be approved for funding. Programs of 600 and more
clock hours are generally eligible and those between 300 but below 600
have some eligibility. But those under 300 hours have no eligibility
even if the school offering the program is Title IV eligible. For
institutions that are already Title IV eligible, maintenance of
eligibility includes various requirements, such as not exceeding a
maximum default rate on federal loans for students who have already
completed or ended their programs. Further, institutions are not
allowed to receive more than 90 percent of their revenue from Title IV
loans and grants.
2
All materials in this course are copyrighted and are only for students in the class, not to be
distributed outside the class under any circumstances.
Professor Tô
Boston University
(a) How should we interpret the coefficient 𝛽” ?
(b) What would be the ideal experiment for estimating this?
(c) In the absence of that ideal experiment, what does this regression
analysis do?
(d) What might be an important difference between T4 and NT4 schools
that is difficult to control for?
(e) Seth proposes to restrict NT4 institutions to those that meet the
requirement for Title IV eligibility of offering at least one program
of no fewer than 900 clock hours (or 45 credit hours). How might this
help?
(f) Brenda suggests using within school estimates of the tuition
difference between eligible and ineligible programs in T4 schools. What
kind of control did she have to add to the analysis to do this?
(g) To implement Brenda’s approach, we adapt the regression equation to
add the relevant set of controls from (f)—and what should we change the
TitleIV indicator to?
(h) Explain how we could use the NT4 schools to conduct a falsification
test.
3
All materials in this course are copyrighted and are only for students in the class, not to be
distributed outside the class under any circumstances.
Professor Tô
Boston University
QUESTION 2 – MISVOTING
This question pertains to the article “Who misvotes? The effect of
differential cognition costs on election outcomes” (Shue and Luttmer
2009).
(a) What is the question the authors seek to answer?
(b) What is the identification strategy the authors use?
(c) Interpret the results in Table 2 Column 1.
(d) Why do the authors regress vote shares, rather than the natural
logarithm of vote shares, on an indicator for being adjacent to a major
candidate? How would the interpretation of the coefficient have changed
if they used the natural logarithm of the vote share as the dependent
variable instead?
4
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distributed outside the class under any circumstances.
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