Report of the Royal Economic Society's Annual Conference: Schools, Football and Alan Greenspan

Citation

Flynn, N. (2001), "Report of the Royal Economic Society's Annual Conference: Schools, Football and Alan Greenspan", European Business Review, Vol. 13 No. 4. https://doi.org/10.1108/ebr.2001.05413dab.007

Report of the Royal Economic Society's Annual Conference: Schools, Football and Alan Greenspan

Report of the Royal Economic Society's Annual Conference: Schools, Football and Alan Greenspan

Niall Flynn

Over 300 of Europe's leading economists gathered in Durham earlier this year for the Royal Economic Society's annual conference. The previous year's conference had been addressed by the Chancellor of the Exchequer, Gordon Brown, and this year saw the same high profile maintained with a keynote lecture from the 2000 Nobel Laureate for Economics, James Heckman. Heckman's work has mainly centred on microeconomics (i.e. the boundary between microeconomics and statistics) and specifically on the appropriate techniques for analysing selective samples. He used these methods in his keynote address to describe how to estimate the size of the financial returns gained from education.

Other notable highlights included a presentation entitled "How to make £22.5 billion", by Ken Binmore and Paul Klemperer, the theorists behind the design of the UK's spectrum auction, and a special session of papers organised by the European Central Bank on the theory and practice behind its policies, with contributions from Vitor Caspar (Director of research at the ECB) and Charlie Bean (Chief Economist at the Bank of England). In total there were 180 papers presented, the subject matters of which illustrated the wide diversity of modern economics. Three of these 180 focused on schools, football and Alan Greenspan.

First, the schools paper. Results from international studies on student performance reveal that pupils in Asia and Eastern Europe perform significantly better than those in Western Europe and the USA. Ludger Woessmann had analysed these results along with additional data for more than 250,000 secondary school pupils from 59 countries. Surprisingly, he found that increases in expenditure and reductions in class size had no significant effect on performance. The biggest influence came from the institutional set up of the educational system: external control of schools' curricula, budgets and examinations all improved examination performance, as did granting individual schools autonomy in hiring teachers, in determining their salaries and in purchasing supplies. Woessmann concluded,"Faced with the alternatives of spending increases or institutional reforms, politicians should opt for the latter".

Ruud Koning presented the paper on football, which confirmed what management in all organisations had surely believed for years: if something goes wrong, it is not their fault. Koning had examined the effect firing a football manager had on the team's performance. By analysing data from 1993 to 1999 for the Dutch premier league, a period in which 28 managers were fired, he concluded that although defensively the teams did improve, on average, the sackings made no significant difference to the teams' results. "Since it is not clear that the results improve after a change of manager, it is likely that fan and media pressure are also strong determinants of the tenure of a football manager", he said.

There is a bubble in the US stock market, and its cause is Alan Greenspan. So claimed Marcus Miller, who argued that investors in the USA expected Greenspan to take decisive action to prevent the stock market falling, but not stop it rising. This had resulted in investors ignoring the warnings of an overvalued market and continuing to buy stocks above and beyond their real value. Miller offered two recent examples of this behaviour: the market crash of 1987 and the Russian debt default in 1998. In both cases Greenspan had aggressively cut interest rates, but in 1996 he failed to raise rates, despite his own warning of "irrational exuberance". Miller argued that although a stock market crash is not inevitable, the market still had a long way to fall: he estimates that the correct value for the S&P 500 index is 750, 40 per cent below its current level.

The above papers and others from the conference can be downloaded from the conference Web site at http://www.dur.ac.uk/~dec0zz4/