Recently in economics Category

NYC teachers and merit pay

The New York Times is reporting that Mayor Michael Bloomberg is planning a new merit pay program for New York City teachers. Bonuses will be dependent on student test scores and will be targeted for teachers working in low-income, high poverty schools.

While I definitely see such a move as a positive for teachers working in poorer schools, I worry that the program could lead to a step backward in students' education. When compensation is linked directly to higher test scores, teachers have more incentive modify curriculum based on testing requirements. While not always a bad thing, such teaching for a test can definitely inhibit students' intellectual curiosity and excitement to learn.

Futhermore, the system doesn't necessarily reward an excellent teacher, but rather, one who has had the good fortune (whether through great teaching or sheer luck) to have his or her class earn high scores.

This case reminds me of the classic store salesman model: commission vs. salary . The commission-based salesman has more incentive to sell you the highest priced product and protection plan, even if it is not the best one. The salaried salesman, who gains nothing from pushing the inferior high-priced product, is much more willing to share his own opinions, leading the customer to better value. I know it's not exactly the same, but I think there is a connection.

At the end of the day, I hope the program works out for best, even though it has me a little bit wary. At least Bloomberg is engaging the issue instead of avoiding it.

An economist comes to EVE Online

I have been playing EVE Online since February 2006 (not very much over the last 8 months). Recommended by a friend, I was initially attracted to the vastness of the game. Instead of running on hundreds of separate servers (shards), like World of Warcraft, EVE runs on a single cluster, with 20 - 30 thousand players logged on at given time.

After a couple of months of playing the game, I became fascinated with EVE's highly complex and realistic economy. Nearly everything within the game is player made, allowing for economic opportunities on a number of levels. From miners to traders, manufacturers to pirates, it was quite obvious that the driving force behind this virtual world was its rich and dynamic economy.

Well aware of this, EVE's parent company, CCP Interactive, recently hired an in-house economist, a first of its kind for any large MMORPG. With duties including macro-economic analysis and fiscal policy, Dr.EyjoG will be providing very interesting reports in the coming months.

Moves like this are why I find EVE to be superior to other MMORPGs (even despite the recent developer cheating allegations). CCP takes EVE very seriously and strives to make the game as engrossing and fun as possible. From my own experience (and from the hundreds of thousands that subscribe), they are doing a pretty good job.