Global Financial Crisis: resources from Intute – by Paul Ayres, Research Officer, Intute: Social Sciences

With the World Economic Forum about to start in Davos, the latest financial rescue package coming to the aid of the UK car industry and some talk about the end of globalisation, how can you discover the best of web on the global financial crisis?

Intute: Social Sciences offers a collection of about 30,000 hand picked websites that have been evaluated by subject specialists. These resources are specifically aimed at a Higher Education audience, but are generally from the open web therefore acting as a supplement to the type of information that is available through IBSS.

For a topic like the global financial crisis, the Economics section is a good place to start to get an overview of some of the issues. What started as a crisis within the sub-prime mortgage market in America has spread to the worlds of Banks and Banking, International Economics and Macroeconomic Policy, amongst others.

One specific site that provides particularly good commentary on the crisis is Vox – a policy portal from Centre for Economic Policy Research. They have just launched a Global Crisis Debate to bring together economists from around the world to share their analysis, views and perspectives.

The blogosphere has helped shape the debate over the global financial crisis, with academics such as Nobel Laureate Paul Krugman coming to the fore. Sites such as the Economics Roundtable and the Palgrave Econolog, round up the best of the economics blogosphere and can help filter the wheat from the chaff.

However, as the downturn has moved into a full blown recession, so the effects of the crisis have been felt in “the real economy” and therefore beyond the narrow confines of the world of economics – meaning that there are other sections on Intute: Social Sciences that may be of interest.

The Business and Management section includes resources on Globalisation and other issues. While the Sociology section includes websites on Economic Performance and Development and the Statistics and Data section features a range information sources on various economic and financial issues.

One of the advantages of working with the Web is getting to see new trends as they emerge and then responding to them. This means adding keywords and resources so that users find something when they search for items about the credit crunch, even though such terms may not have made it into formal controlled vocabularies yet.

Similarly, the Intute: Social Sciences blog provides news based links to items of interest that can help you keep up to date with the crisis and articles such as 55 Essential Economics Websites that will hopefully be of use even after the current crisis is over.

And in the spirit of “teach a man to fish” the Virtual Training Suite provides a series of tutorials including the Internet Economist, that aim to teach Internet research skills, so that you can start to discover the best of the web yourself, for those times you can’t make it to Intute: Social Sciences – but we hope that you’ll stop by soon.

Guest blog post by: Paul Ayres, Research Officer, Intute: Social Sciences

The Economics of University Rankings

How do students choose their place of study? Surely, lots of issues need to be taken into account when it comes to finding the right university – what do friends do, where would you like to live, etc. What matters most for many aspiring new students is the quality of teaching and research, however. Will I get good value for my money? Is my university recognised for its research output, or has nobody ever heard about them at all? Career concerns matter more than ever these days, and competition for the best places to study is fierce indeed. What used to be a fairly straightforward decision to make back in the old days, has become one of the most important strategic steps in one’s early career.

This is particularly true for economics students. City employers place great emphasis on an immaculate CV, are looking for the right blend of academic achievement, working experience and non-curricular commitments. So it’s no surprise that practically every week a national newspaper, TV or radio station, or internet blog, would publish new university league tables and rankings. Needless to say, the results are most contradictory. Whereas a certain overlap among the ‘usual suspects’ in the top five can be expected, the similarities end right there. Regrettably, it seems that these league tables simply add more to the confusion. Glossy university prospectuses need to be read with care – you wouldn’t really expect a university to publish unfavourable results, or would you?

For postgraduate students, matters are even worse. Often, league tables do not indicate how a ranking is calculated exactly: what is being measured, and how? What are the weights? Have teaching and research staff been involved in the assessment? Whereas for undergraduates the quality of teaching is of utmost importance, for a PhD student the availability of resources might matter much more: will my supervisor have enough time for me, or will she or he be too busy teaching? Are there other postgrads around with similar research interests? And how should one empirically assess quality standards in the first place? Economics departments are often the biggest and, in terms of finance, the most important ones at their universities, so making a good choice seems imperative.

Let’s fold away our papers then and have a more serious look at what peer-reviewed academic journals have to say about this matter. I turn to IBSS, and simply search for ‘rankings’ in the title field and ‘universities’ in the general section – otherwise, the number of hits would be just too high to digest. My search yields a good 58 records, more than enough to get a good overview

The most recent article I find of relevance for PhD students is Rabah Amir and Malgorzata Knauff’s ‘Ranking economics departments worldwide on the basis of PhD placements’ (2008). The authors look at 58 economics departments and explain in detail their statistical methodology, something that is clearly amiss in many mainstream league tables. The main point for them is how successful PhD economists are in finding a proper job. The MIT, Harvard and Stanford are the top three places according to this study. This doesn’t come as a surprise – more interestingly, the midfield displays quite a variety of schools inside and outside the US. In ‘Ranking economics journals, economics departments, and economists using teaching-focused research productivity’ Melody Lo, M.C. Sunny Wong, Franklin G. Mixon, Jr., (2008), the focus is a different one. Here, the authors take a closer look at the quantity and quality of research that is being produced. They point out that that many smaller colleges that wouldn’t make their way to the top in traditional rankings, fare surprisingly well using this framework. For postgraduates, or indeed research staff who look for employment elsewhere, this can give really valuable findings. Searches on IBSS retrieve similar studies for other popular countries for postgraduate study, e.g. Australia, New Zealand, and of course the UK.

Finally, a note of caution: are we worrying too much about league tables, rankings, and figures altogether? Is a small number in a table all that matters for such a profound choice as the place of study? Many will agree, and it is important to be critical about rankings: to what extent do they simply contribute to short-lived hype? The reason to go to university should be more than the admittedly understandable wish to impress potential employers. A critical assessment of rankings by those who conduct and sell them is perhaps a bit too much to expect. Again, IBSS proves useful to all those who aim to fundamentally investigate the nature of rankings as such. Do they work at all, and if they don’t, why not? Michael McAleer (2005) ‘The ten commandments for ranking university quality’, writes up what good rankings should measure, and how. ‘Academic quality, league tables, and public policy: a cross-national analysis of university ranking systems’, David D. Dill, Maarja Soo (2005) takes a general look at indicator-based public policy analysis. ‘To rank or to be ranked: the impact of global rankings in higher education’, Simon Marginson, Marijk van der Wende (2007) investigates the effects of rankings on the higher education community. For good and for bad, rankings and indicators will play an increasingly important role for education policy assessments and the distribution of research grants, not just for economics students and researchers. Much more debate on this matter is to be expected – inspired, hopefully, by more serious assessments of what rankings can provide, and where they fail.

Credit crunch, fuel prices, and all that

With gas and electricity prices soaring, most of us get a first-hand experience of the effects of the so-called ‘credit crunch’ and rising oil prices. With utility bills eye-wateringly high and food prices rising too, a lot of people demand immediate action from the government. In fact, just today angry lorry drivers have been blocking motorways in London and Wales. Whereas the government points to difficult international economic conditions, the notorious oil market in particular, the opposition, of course, holds the government responsible for what some commentators already call the current economic crisis. With emotions running high, and self-acclaimed experts constantly trumpeting their opinions on every TV channel, I want to know what a ‘credit crunch’ really is. And what does it have to do with anything? All this talk worries me – will the government, hoping to appease voters, clamp down on environmental policies and fuel taxes? Could we have avoided this mess had we invested more in renewable energy sources? Some people even call for a renaissance of nuclear power. All of this seems quite interrelated, so what’s the connection?

I run a quick search on IBSS, combining the keywords ‘Credit market’, ‘Credit crunch’, and ‘United Kingdom’. This gives me a nice and manageable 25 hits, the first one of which is a recent survey carried out by the Bank of England: ‘Household Debt and Spending: Results from the 2007 NMG Research Survey’ (M Waldron and G Young, Bank of England quarterly bulletin. 47(4) 2007 Winter, 512-521), pointing out that already at the end of last year renters were facing increasingly severe financial pressures. I find a number of papers that test empirically the relationship between what the government, the Bank of England, banks and consumers are doing. One example is ‘The Credit Channel of Monetary Policy: Evidence from the Housing Market’ (M Lacoviello and R Minetti, Journal of macroeconomics. 30(1) 2008, 69-96). The authors specify the reaction of the housing and mortgage markets to changes in central banks’ interest rate policies. I get an idea of how these abstract market issues relate to the real world: the Bank of England sets key interest rates; this is what banks have to pay when they borrow money from the central bank. Due to inflationary pressures – in particular high oil prices! – the Bank of England has kept the rates quite high in order to avoid banks giving away too much ‘cheap money’ to their customers, who then would run off to spend it all, only to increase inflation even further! But high interest rates mean high mortgage costs, and then there’s the role of expectations: if everyone, buyers and banks, expect housing prices to fall they will go down eventually as buyers sit back and wait, and banks grow more reluctant to grant buyers a loan – the credit market contracts, this is the evil credit crunch. Running a quick search on ‘Housing market’ and ‘Expectations’ brings up a couple of interesting papers that explain this link in detail. So it seems the credit market has quite some influence on what’s going on in the economy as a whole. And the Bank of England can’t just lower the rate to make buyers happy, as inflation is quite high already, and surely no one would want prices to go up even further.

The rise in oil prices affects everyone, whether you’re driving a car or not. Just search for ‘Oil prices’ and ‘United Kingdom’ to get a dozen or so good articles that work out what these effects are: higher transport costs mean higher retail prices, as goods need to get shipped to local supermarkets. Which leads straight on to an issue well-discussed these days: transport and environmental policies. S Gleister: ‘UK Transport Policy 1997-2001’ (Oxford review of economic policy. 18(2) 2002 Summer, 154-186), is not very happy with the way things have been done since the 1990s; too little freight on rails, and too much control of the Treasury when it comes to local transport infrastructure investment decisions. So I finally run a search combining the keywords ‘Environmental policy’, ‘Transport policy’ and ‘United Kingdom’. I get a thousand or so records, so narrow it down to recent years. Still I get a huge variety of papers, proponents of nuclear energy and wind energy alike, or papers on OPEC policy – it seems the debate has only just begun.