First Look

Abstract—We collect data on operations, targets, and human resources management practices in over 1,800 schools educating 15-year-olds in eight countries. Overall, we show that higher management quality is strongly associated with better educational outcomes. The UK, Sweden, Canada, and the U.S. obtain the highest management scores closely followed by Germany, with a gap to Italy, Brazil, and then finally India. We also show that autonomous government schools (i.e., government funded but with substantial independence like UK academies and U.S. charters) have significantly higher management scores than regular government schools and private schools. Almost half of the difference between the management scores of autonomous government schools and regular government schools is accounted for by differences in leadership of the principal and better governance.

Download working paper: http://www.nber.org/papers/w20667

Abstract—We study the economic tradeoffs that drive organizations to position themselves closer to or further away from a multi-sided platform (MSP) business model, relative to three traditional alternatives: vertically integrated firms, resellers, or input suppliers. These tradeoffs lead to a comprehensive discussion of the defining features of MSPs. The formal model we develop focuses on the MSP vs. vertical integration choice, which we interpret in the context of professional services. A key tradeoff emerges between the need to motivate observable effort by professionals (best achieved by a MSP) and the need to coordinate decisions that generate spillovers across professionals (best achieved by a vertical integrated firm). We show how this baseline tradeoff is impacted by the nature of contracts available to the vertically integrated firm and the MSP, and whether professionals hold private information.

Download working paper: http://www.hbs.edu/faculty/Publication%20Files/15-037_4d9f8cf9-28b6-482e-9c18-0422d4553c8e.pdf

Abstract—We compare the performance of a comprehensive set of alternative peer identification schemes used in economic benchmarking. Our results show the peer firms identified from aggregation of informed agents' revealed choices in Lee, Ma, and Wang (2014) perform best, followed by peers with the highest overlap in analyst coverage, in explaining cross-sectional variations in base firms' out-of-sample (a) stock returns, (b) valuation multiples, (c) growth rates, (d) R&D expenditures, (e) leverage, and (f) profitability ratios. Conversely, peer firms identified by Google and Yahoo Finance, as well as product market competitors gleaned from 10-K disclosures, turned in consistently worse performances. We contextualize these results in a simple model that predicts when information aggregation across heterogeneously informed individuals is likely to lead to improvements in dealing with the problem of economic benchmarking.

Download working paper: http://ssrn.com/abstract=2517496

Abstract—The effect of scale on innovation is central to traditional endogenous growth theory and to new theoretical approaches that focus on variability in innovation outcomes within the firm size distribution. Using new data on 11,514 U.S. R&D firms active during the interwar and post-WWII periods, this paper examines long-run effects. Although the level and quality of innovation scaled strongly with firm size, innovation novelty was considerably more invariant to firm size across both breakthrough eras. While there is some evidence of firm-level heterogeneity as a determinant of the scale effect, the new data highlight the importance of variability in the nature of technological discovery.

Download working paper: http://www.hbs.edu/faculty/Publication%20Files/15-038_54e189cf-0289-4cfc-b0da-e29552016f3b.pdf

Abstract—The price indexation of Social Security benefit payments has emerged in recent years as a flashpoint of debate in the United States. I characterize the direct effects that changes in that price index would have on retirees who differ in their initial wealth at retirement and mortality rates after retirement. I propose a simple but flexible theoretical framework that converts benefits reform first into changes to retirees' consumption paths and then into a net effect on social welfare. I calibrate that framework using recently produced data on Social Security beneficiaries by lifetime income decile and both existing and new survey evidence on the normative priorities Americans have for Social Security. The results suggest that the value retirees place on protection against longevity risk is an important caveat to the widespread enthusiasm for a switch to a slower-growing price index such as the chained CPI-U.

Download working paper: http://ssrn.com/abstract=2523601