Research: Karsten Hansen, Marketing
breakthrough methodology links additional schooling to higher
By Rebecca Lindell
There are those
who argue that intelligence, as reflected in test scores,
is fixed and immutable. No need for additional schooling,
they say; if a student performs poorly on standardized tests,
not much can help.
School Professor Karsten
Hansen begs to differ.
In an award-winning
paper published recently in the Journal of Econometrics,
Hansen found evidence that an additional year of schooling
can indeed boost test scores by up to 2 to 4 percent.
The findings are
especially timely given the federal government's focus on
standardized testing through the No Child Left Behind Act.
The law has pressured educators to determine the best way
to allocate education resources to meet the performance standards
mandated by the act.
"Our paper taps
into more philosophical aspects, because there's a group of
people out there claiming that more schooling cannot improve
test scores," Hansen says.
"It's a little
depressing to think you can't improve your basic abilities
by attending school. It's very depressing to think it's all
over at age 6," Hansen says. "At least the numbers in our
study suggest that schooling can have an impact."
Hansen and his
co-authors, James Heckman of the University of Chicago and
Kathleen Mullen of Harvard University, devised a statistical
framework to analyze whether an extra year of school improved
scores on standardized tests. They found a positive link between
the two factors, particularly for students with lower innate
To reach their
conclusions, the researchers devised a breakthrough methodology
to correct for differences in students' abilities, socioeconomic
status and other variables. The process enabled them isolate
the impact of schooling on test scores.
Their paper, "The
Effect of Schooling and Ability on Achievement Test Scores,"
received the journal's Dennis J. Aigner Award in September.
The award recognizes the best article on applied econometrics
published in the journal over a two-year span. The article
appeared in the journal's July-August 2004 issue.
Hansen began his
research for the paper as a post-doctoral fellow in the economics
department at the University of Chicago. Now an assistant
professor of marketing at the Kellogg School, he currently
focuses on business rather than public policy.
But the tools Hansen
helped create for the schooling study can also be brought
to bear on marketing questions, he says. Researchers can use
the same methodology whenever they want to study links between
factors over which they have no direct control.
"Suppose you wanted
to understand how a certain brand performed in different markets
and how the pricing impacted sales," Hansen says. "You could
just look at the correlation between sales and prices across
a number of markets, but you could be comparing a very competitive
market to a less competitive market, or a large market to
a small market. If you didn't take those factors into account
when you did the correlations, you could come up with the
wrong inference about the exact dependence between price and
"The tools for
correcting for those variables are exactly the same in both
economics and marketing. These are fields in which we can't
control the experiment - we can't force consumers to do something,
the way we can control variables in a lab. The best we can
do is to take the data that's already been generated and put
it in a statistical framework and analyze it."
Hansen is now turning
his attention toward retail competition and the impact of
big-box stores on local businesses. "Are there ways they can
compete with them?" Hansen asks. "Which customers will they
lose to Wal-Mart, and what can local retailers do to hold
on to their remaining customers?"
which can shed light on shopping patterns, can help to answer
those questions, Hansen says.
For example, he
says, it is a relatively small percentage of shoppers - 20
percent - who switch from local retailers to Wal-Mart. Yet
that percentage can account for a 70 percent overall loss
in the local stores' revenue.
"If local retailers
can find a way to retain at least some of these customers,
they may survive in the long run," Hansen says.