Carpe Diem

The 2014 math SAT test results confirm a pattern that has persisted for 40+ years — boys are better at math than girls

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mathsatratioThe College Board released its 2014 SAT college-entrance test results today, and here are some highlights of the 2014 SAT math test:

1. Continuing an uninterrupted trend that dates back to at least 1972, high school boys outperformed girls on the 2014 SAT math test with an average score of 530 points compared to the average score of 499 for females, see top chart above. The statistically significant 31-point male advantage this year on the SAT math test is one point lower than the 32-point difference last year, and just slightly below the 34 point difference over the last two decades favoring boys. In terms of percentile ranking, the average test score for male high school students (530) represented the 55th percentile of all students. By comparison, the average female test score (499) was slightly below the 45th percentile ranking for all students (see top chart above).

In addition to average scores by gender, the College Board also reports the 2014 SAT math test results by gender for all scores between 200 to 800 in 10-point increments, and the male-female ratios for each of those 10-point increments are displayed in the bottom chart above. Here are some observations:

2. Male students outnumbered female students for all 2014 math SAT scores of 590 (73rd percentile) and above, and those outcomes are represented in the bottom chart above by all of the blue bars higher than the 1.0 Male:Female ratio (red line).

3. As SAT math scores increased by 10-point intervals from 590 to 800, the male-female ratio gradually increased, reaching a peak male-female ratio of slightly more than 2-to-1 for perfect test scores of 800. At the highest level of math performance on the SAT test this year, there were 203 males achieving perfect scores for every 100 females.

4. We can adjust for the fact that more young women (888,825) than men (783,570) took the SAT test in 2014, and compare the percentage of males who earned perfect scores of 800 points (1.3%) to the percentage of females with perfect scores (0.54%), which produces an adjusted male-female ratio of 2.41-to-1 (vs. the 2.03 unadjusted ratio) for students who had perfect 800-point scores.

5. For scores of 770 points and above on the 2014 math SAT, boys outnumbered girls by a ratio of 1.91-to-1 (22,586 to 11,802) and when adjusted for the differences in sample size, the male-female ratio was 2.17-to-1 (2.88% vs. 1.328%) for scores between 770-800.

One possible explanation for the fact that high school boys consistently score higher on average than girls on the math SAT test and outnumber girls by more than 2-to-1 for perfect scores, would be that high school boys are better students on average than high school girls and are better prepared in mathematics than their female classmates. But that explanation would be false, based on College Board data for students taking the 2013 SAT test (not yet available for 2014):

6. For SAT test-takers, high school girls had superior overall academic high school records compared to boys: females represented 56% of the students in the top 10 percent of their graduating classes, 59% of the students graduating with an A+ grade point average were female, and high school girls graduated with a higher overall average GPA of 3.44 compared to a 3.30 average GPA for their male counterparts.

7. High school girls were over-represented in advanced AP/Honors math classes (54%) compared to boys (46%), and also in advanced AP/Honors science classes by 56% to 44%.

8. For those high school students taking four years of high school mathematics, girls were over-represented (52%) compared to boys (48%), and more of the students studying natural sciences for four years were female students (53%) than male (47%).

Bottom Line: Even though female high school students are better prepared academically on many different measures than their male classmates, both overall and for mathematics specifically, female high school students score significantly lower on the SAT math test, and the +30-point differences in test scores (and 10 point differences in average percentile rankings) favoring males has persisted for generations. At the high-end of math performance, high school males significantly outperformed their female peers on the 2014 SAT math test by a ratio of more than 2-1 for perfect and near-perfect scores, and that outcome has persisted for many decades.

And yet, despite the persistent, statistically significant differences in math performance by gender on the math SAT test that have continued for generations, we hear statements like this: “There just aren’t gender differences anymore in math performance,” says University of Wisconsin-Madison psychology professor Janet Hyde, “So parents and teachers need to revise their thoughts about this. Stereotypes are very, very resistant to change, but as a scientist I have to challenge them with data.”

Given the significant and persistent gender differences in SAT math test scores that have persisted over many generations, the scientific data about gender differences in math performance would seem to present a serious challenge to Professor Hyde’s frequent claims that there are no gender differences in math performance.

Further, the fact that women are underrepresented in STEM occupations and hold only 26% of STEM jobs according to a 2013 Department of Commerce report certainly isn’t because female students are being discouraged from studying math and science in high school. In fact, the evidence shows that females are excelling in math and science in high school – they outnumber males in AP/Honors math and science courses, and are more likely than their male counterparts to take four years of math and science.

Further, compared to boys, high school girls get better grades on average, and are far more likely to graduate in the top 10% of their high school classes, and are much more likely than boys to attend and graduate from college and go on to graduate schools. By all objective measures, girls have essentially all of the necessary ingredients that should result in greater representation in STEM fields like engineering and computer science except perhaps for one: a huge, statistically significant and persistent 30-point gender gap (and a 10 percentile gender gap) on the SAT math test in favor of boys that has persisted for more than 40 years. If there are some inherent gender differences for mathematical ability, as the huge and persistent gender differences for the math SAT test suggests, closing the STEM gender degree and job gaps may be a futile attempt in socially engineering an unnatural and unachievable outcome.

Carpe Diem

US gasoline prices plunge to an average of $3.28 per gallon ($2.77 in St. Louis), saving US consumers billions of dollars

gasAccording to GasBuddy, retail gas prices in the US have fallen in the last week to an 8-month low of $3.28 per gallon, which is 42 cents lower than the peak of $3.70 per gallon in April (see chart above). How does that price drop at the pump translate into savings for consumers?

According to the Department of Energy, Americans buy 365 million gallons of gasoline every day, so every one cent drop in prices at the pump saves consumers $3.65 million per day, and $1.33 billion dollars over a year. Therefore, the 42 cent drop in prices since April will save US consumers almost $56 billion over the next year compared to what they would have paid if gas remained at $3.70 per gallon.

And given the downward trend in prices and the continued significant increases in US shale oil production, it’s highly likely that we’ll see retail gas prices fall further – they’re already close to $3 per gallon on average in Missouri (with prices as low as $2.77 in the St. Louis area), South Carolina, Oklahoma, Mississippi and Kansas.

Carpe Diem

Rising health care costs explain money income inequality

employmentcostsIn today’s Wall Street Journal, AEI’s Andrew Biggs and co-author Mark Warshawsky explain how rising health care costs have accounted for almost all of the recent increases in money income inequality. As the chart above helps to illustrate, that’s because non-monetary fringe benefits (because of rising employer costs for health care coverage) have increased much more (60.2% for the 2001-2014 period) than monetary wages and salaries (less than 37%). To offset higher costs for their employees’ health insurance, employers reduce increases in monetary wages and salaries, ceteris paribus. But every dollar lost in higher wages/salaries has a disproportionately larger effect on low-paid employees than high-paid employees, and results in higher money income inequality. Here’s an excerpt of “Income Inequality and Rising Health-Care Costs“:

Most employers pay workers a combination of wages and benefits, the most important of which is health coverage. Economic theory says that when employers’ costs for benefits like health coverage rise, they will hold back on salary increases to keep total compensation costs in check. That’s exactly what’s happened: BLS data show that from June 2004 to June 2014 compensation increased by 28% while employer health-insurance costs rose by 51%. Consequently, average wages grew by just 24%.

But here’s what the news headlines miss: Rising health costs don’t affect every employee the same. An average family health policy today costs employers nearly $12,000 per year, up from only $4,200 in 1999. Had employer premiums not risen, average salaries today would be around $7,800 higher. For a lower-income worker who today makes $30,000, that could have meant a 26% salary increase. By contrast, a “one percenter” making $250,000 today would have seen his earnings rise only by 3.1%. Health costs are a bigger share of total compensation for lower-wage workers, and so rising health costs hit their salaries the most. The result is higher income inequality.

Health costs are by no means the only factor affecting income inequality. But it is shocking that health costs are seldom mentioned with regard to income inequality when the BLS data show that rising health costs can fully account for the increasing inequality of workers’ salaries from 1999 through 2006.

These data give us a different perspective on the inequality debate. Most people think of income inequality as money “redistributed” from the poor to the rich. In reality, much of what we’re seeing is more of low-income workers’ compensation going toward their health benefits and less ending up in their pockets. That’s a different problem and points toward different solutions.

MP: It’s an interesting and important point that you can observe rising money income inequality even though there’s no (or significantly less) increase in “total compensation inequality.” According to the analysis by Biggs and Warshawsky, the increasing share of fringe benefits in total employee compensation explains much of the increase in money income inequality.

Carpe Diem

Monday morning links

ustrade1. Chart of the Day. Total US trade activity (exports + imports) reached a new all-time high in August of $437 billion.

2. Minimum Wage, Maximum Politics. “While a 40% across-the-board increase in the minimum wage may have political appeal, any politician sincerely attempting to help those in need would recognize the negative impact of federal increases and the need for policies that increase economic growth. The failure to address these issues suggests that the administration’s motive is political, not compassionate. The president’s minimum-wage hike might cost 500,000 jobs…..but the pre-election push is mostly about safeguarding the jobs of a smaller group of people: congressional Democrats.” Andy Puzder in today’s WSJ.

3. Inconvenient Weather Fact. October 1 marked the 18th year of “no significant warming trend in surface average temperature.”

4. Unsustainable? Retired Queens College (CUNY) history professor Edgar J. McManus gets a city pension of $561,286 a year. His final salary was $116,364, that’s a ratio of almost 5:1! Fifteen other NY retired educators collect more than $200,000 a year and almost 2,000 get more than $100,000 a year, mostly at levels far above their final salaries?

5. America, Here’s Your Deadly, Immoral Drug War. A 58-year old Georgia businessman was shot and killed by a SWAT Team during an (unauthorized) no-knock drug raid that found NO drugs. David Hooks becomes America’s Drug War Casualty #34 for 2014.

6. America, Here’s Your War on Plants. Georgia police raided a man’s okra garden with a chopper, K-9 unit, and task force, thinking that it was weeds.

7. Markets in Everything. Mayo Clinic introduces workplace medical kiosks for real-time medical consultations with MDs, physician assistants and nurse practitioners. (HT: Ryan Lais)

8. Livin’ Large. What It’s like to Fly the $23,000 Singapore Airlines Suites Class.

9. Who-d a-Thunk It? States are now reconsidering wind energy? After lawmakers promised little or no regulation and generous tax breaks, some leaders in Oklahoma and other states fear their efforts succeeded too well, attracting an industry that gobbles up huge taxpayer subsidies, draws frequent complaints and uses its powerful lobby to resist any reforms.

10. Economic Milestone. “We’re witnessing the first industrial-led recovery in the US since 1961,” according to Donald Broughton, Avondale Partners senior research analyst, on CNBC.
Carpe Diem

Silicon Valley gets a stern lecture about diversity from a mostly white and mostly male NY Times editorial board

Meet the mostly white and mostly male New York Times Editorial Board (full bios here):

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Here’s a slightly edited version of the October 4 New York Times staff editorial “Silicon Valley’s The New York Times’s Diversity Problem“:

After years of playing down the problem, technology companies like Google, Facebook and Apple The New York Times now says they’re it’s serious about improving the gender and ethnic diversity of their work forces and corporate its editorial boards. Recent data from those companies and others like them about the composition of the NY Times editorial board confirm what everyone has long known: Most of their employees contributors are white and Asian most are men. As the graphic above demonstrates, men on the NY Times editorial board outnumber women by almost 2-to-1 (12 men vs. 7 women), and blacks (5.3%) and Hispanics (5.3%) are significantly under-represented on the board relative to their shares of the US population (13% and 17% respectively for blacks and Hispanics).    

Tech Publishing companies like the New York Times should care about these numbers. Many studies show that companies publishers with gender, political and ethnic diversity on their editorial boards tend to be more creative and more profitable, because varied perspectives help them design products and services write editorials that appeal to a diverse, worldwide audience.

There are approaches that could help:

  • Top technology companies The New York Times hires a lot of graduates from elite universities like Stanford, Harvard, Yale, Brown, Chicago, Columbia, NYU and the University of California, Berkeley for its editorial board (see graphic above). Their Its recruitment efforts should include a broader array of colleges…
  • Companies The New York Times should open up the initial interviewing process for its editorial board. The National Football League, for example, has the Rooney Rule, which requires teams to interview at least one minority candidate for every head coach or general manager opening, and this rule should be implemented at the New York Times.
  • Creating a welcoming culture, which is often easier said than done, would help these companies The New York Times retain employees board members who get in the door. The under-representation of women and minorities on the current New York Times editorial board might not be creating a sufficiently “welcoming culture.” 

There is a lot that the education system and the government need to do to get more women and minorities interested in science and technology journalism. But the technology newspaper industry (including the New York Times editorial board) can start tackling its diversity problem right now.

Thanks to John Hinderaker’s article at the Powerline Blog (“Self-Knowledge at the New York Times“) for inspiring this CD post. Here’s part of John’s excellent post (emphasis added):

The Times says it is a “problem” that “Most [Silicon Valley] employees are white and Asian men.” So let’s count! Sure enough, 11 of the editorial board’s 19 members are white or Asian men. Worse, only one out of 19 is African-American. That’s a little under one-half the proportion of African-Americans in the population. How about a Rooney Rule for the New York Times?

Even more notable, of course, is the lack of philosophical diversity on the editorial board. As far as I know, it doesn’t include any conservatives, even though surveys indicate that there are close to twice the number of conservatives as liberals in the U.S. Remember the value of diversity: “varied perspectives help [companies] design products and services that appeal to a diverse, worldwide audience.” Actually, people of different skin colors may or may not have different perspectives, but people of different political philosophies certainly do. It is hard to deny that diversifying the political orientation of the editorial board would help the Times “appeal to a diverse, worldwide audience.” But I don’t suppose that is the paper’s goal: it is of liberals, by liberals, and for liberals. That is their prerogative, but it is laughable to be lectured on diversity by a monolithic group like the Times’s editorial board.

Carpe Diem

With market pricing for Stevie Wonder and 200,000 tickets for Garth Brooks in Mpls., the secondary market will suffer

I’ve written many times before about how an active, secondary market for concert tickets can only exist when: a) the artist, promoter or venue has intentionally (usually) decided to under-supply the number of concert tickets relative to fan demand, and/or b) the artist, promoter or venue has intentionally (usually) under-priced the tickets relative to the market price. Supply enough concert tickets at market prices and voilà, the secondary market for tickets selling above face value largely vanishes….. It now appears that both of those strategies might actually be happening, here are two recent examples:

1. Stevie Wonder will start his 11-city “Songs in the Key of Life” national tour with a November 6 concert at NYC’s Madison Square Garden. An analysis of ticket prices for sale on Ticketmaster for Stevie Wonder’s concerts reveals a multi-price ticket strategy that might be an attempt to reduce secondary market sales by pricing the tickets at close to market value when originally sold. For example, tickets for the November 20 concert at the Palace of Auburn Hills (near Detroit) range in price from a minimum of $84.70 ($77 + a $7.70 service fee) to a maximum of $1,265 ($1,150 + a whopping and “unconscionable” service fee of $115), with tickets for sale at about 50 different prices in that wide range. Obviously, the ticket prices are determined by proximity to the stage, and the $84.70 seats are in the back of the arena and the tickets priced around $1,000 are in the first few rows.

2. Next week, Garth Brooks will start his first national tour in 16 years with 6 concerts in 8 days in Jacksonville, FL, followed by 4 shows in 2 days in Lexington, KY, and then 10 concerts in mid-November at the Target Center in Minneapolis, including two shows per night on four of those days (6:30 and 10:30). With a seating capacity at the Target Center of almost 20,000, that would mean that there will be about 200,000 tickets available for Brooks’ 10 Minneapolis concerts. In contrast to the pricing of tickets for Stevie Wonder’s concerts at 50 different price points, Garth Brooks is charging a uniform price $70.50 for all tickets ($56.87 plus $6.13 tax, a $2.00 facility fee, and a $5.50 service charge). Seating is apparently assigned randomly, with an 8-ticket per household/organization limit and a “paperless ticketing” policy that requires identification and the credit card used to purchase the tickets for entry to the stadium.

Bottom Line: Both of these strategies could effectively reduce the secondary market for tickets selling above face value. Instead of under-pricing the tickets relative to the market, Stevie Wonder tickets are being priced closer to their true market value. And instead of under-supplying the number of tickets relative to fan demand with a single show in an arena that can accommodate only 20,000 fans, Garth Brooks is supplying 200,000 tickets over 10 days and 10 concerts in one city. That alone could have successfully reduced the secondary market – but by additionally imposing “paperless ticketing,” the secondary market will probably be even further reduced.

Carpe Diem

The ‘predatory pricing’ myth and why consumers are so ‘evangelical’ about ride-sharing – it represents the future

There’s a stubborn economic myth that has persisted for generations centuries (see update below) that goes something like this: An aggressive, predatory firm preys on its competitors by charging below-cost predatory prices in an attempt to drive all of its rivals out of business. If successful, the predatory firm then is rewarded with complete control of the market and it then proceeds to jack up prices to take advantage of its dominant monopoly position. The predatory firm wins, and the rivals and consumers lose.

There’s a good reason the predatory firm/pricing myth remains a myth – this scenario never actually happens. Here’s why — in a market economy, as soon as the predatory firm raises its prices and earns monopoly profits, what happens? The enticing and redolent “smell of profits” attracts new rival firms who enter the industry and then quickly erode the predatory firm’s monopoly profits through vigorous competition and price-cutting. Unless of course the dominant firm has some type of protection against competition and becomes a “coercive monopoly” (like the USPS), which could only happen through some government legislation, regulation or fiat and never through market forces. In fact, a much better and more realistic strategy for the dominant firm to control the market (like Amazon maybe?) would be to keep its prices so low that no rival could successfully compete against it – but that’s not part of the predatory firm/pricing myth.

In the Washington Post yesterday, columnist and “Big Taxi evangelist” Catherine Rampell wrote an op-ed (“Who will win the ridesharing war? Probably not consumers.”) that suggests she has swallowed the predatory firm/pricing myth hook, line and sinker.

Here are a few excerpts:

Medallions and other regulations capping the number of livery cars available are often derided as taxi cartel protectionism.

Well, that’s because those artificial, anti-consumer restrictions are a form of government-enforced taxi cartel protectionism and serve the interests of the government-protected taxi cartel members, not the consumer.

Uber and Lyft are engaged in a price war, which in the short run certainly looks good for consumers.

It looks good to consumers, because well…. low price are good for consumers.

But there’s also the long run to think about. For all the rhetoric about the value of competition, the goal of this price war is to neutralize the competition and become the only livery game in town. Which would mean more market power, over both drivers and consumers, probably to the detriment of both.

Sure, but what’s to stop new rivals from emerging to challenge the “only livery game in town” if Uber or another ride-sharing service could ever unrealistically achieve that monopoly status? Uber or Lyft would have no government-sanctioned protection from competition like the current taxi cartels, and would face vigorous competition from new start-ups, like the new ride-sharing service Gett, which is offering an introductory flat fare of $10 for rides anywhere in Manhattan at any time of day. Therefore the “only livery game in town” anti-consumer outcome with high prices (and poor service) is the major flaw in the predatory firm/pricing myth because it’s pure fantasy for that outcome to ever actually happen.

Finally, “Big Taxi evangelist” Rampell closes her op-ed with this paragraph, demonstrating her belief in the predatory firm/pricing myth:

In other words, for all their bellyaching about the bullies of Big Taxi, Uber and Lyft are becoming pretty big bullies themselves. Nothing about their behavior suggests the ultimate winner of the ride-sharing wars will wield its power beneficently when it controls the market and can raise consumer prices at will. Consumers will just be trading in one monopoly — loathed Big Taxi — for another, less regulated one.

Except there’s a major and very big difference: loathed Big Taxi is loathed for a reason – it has government protection against competition through taxi medallion systems, etc. – something that Uber, Lyft, Sidecar, Gett, Getaround, Zip Car, Car2Go, etc. don’t have. And that’s why “ride-sharing evangelists” (Rampell’s term) are so enthusiastic about the transportation market today – they are no longer at the mercy of Big Taxi’s high prices and poor and limited service and they now have a historically unprecedented number of transportation options including the services of the companies listed above.

This is a great time to invoke the timeless wisdom and insight of French economist Bastist, who four days before his death in 1850 wrote this in a letter to a friend: “Treat all economic questions from the viewpoint of the consumer, for the interests of the consumer are the interests of the human race.” In today’s debate about ride-sharing and transportation options, we should primarily consider the general interest of the consumer, not the special, entrenched interests of Big Taxi. And consumers have clearly and overwhelmingly expressed their preferences – they are “evangelical” about ride-sharing for a very good reason – it’s a much better, cheaper, and faster option than Big Taxi. And they’ve seen the transportation future, and it’s not Big Taxi.

Update: See this related 1992 Cato article “The Myth of Predatory Pricing” by economist Thomas J. DiLorenzo, who writes:

Predatory pricing is one of the oldest big business conspiracy theories. It was popularized in the late 19th century by journalists such as Ida Tarbell….

The predatory pricing argument is very simple. The predatory firm first lowers its price until it is below the average cost of its competitors. The competitors must then lower their prices below average cost, thereby losing money on each unit sold. If they fail to cut their prices, they will lose virtually all of their market share; if they do cut their prices, they will eventually go bankrupt. After the competition has been forced out of the market, the predatory firm raises its price, compensating itself for the money it lost while it was engaged in predatory pricing, and earns monopoly profits forever after.

The theory of predatory pricing has always seemed to have a grain of truth to it — at least to noneconomistsbut research over the past 35 years has shown that predatory pricing as a strategy for monopolizing an industry is irrational, that there has never been a single clear-cut example of a monopoly created by so-called predatory pricing, and that claims of predatory pricing are typically made by competitors who are either unwilling or unable to cut their own prices.

Predatory pricing is the Rodney Dangerfield of economic theory–it gets virtually no respect from economists. But it is still a popular legal and political theory….

Carpe Diem

Four charts from today’s BLS Employment report

jobs

1. The 12-month gain in nonfarm payroll employment through September of 2.635 million jobs is the largest 12-month increase since early 2006.

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2. September was the first month that US civilian employment (146.6 million) was above the November 2007 peak of 146.59 million and is now at a new record high.

oilgasjobs

3. Oil and gas extraction employment at 213,500 jobs in September is the highest in more than 28 years, going back to July 1986.

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4. Temporary help services employment reached a new record high in September of 2,933,500 jobs.