OUTPUT AND EFFICIENCY IN THE PRODUCTION OF BUSINESS AND ECONOMICS MAJORS by Carlos Asarta A DISSERTATION Presented to the Faculty of The Graduate College at the University of Nebraska In Partial Fulfillment of Requirements For the Degree of Doctor of Philosophy Major: Economics Under the Supervision of Professor William B. Walstad Lincoln, Nebraska May, 2007 UMI Number: 3263485 3263485 2007 Copyright 2007 by Asarta, Carlos UMI Microform Copyright All rights reserved. This microform edition is protected against unauthorized copying under Title 17, United States Code. ProQuest Information and Learning Company 300 North Zeeb Road P.O. Box 1346 Ann Arbor, MI 48106-1346 All rights reserved. by ProQuest Information and Learning Company. Output and Efficiency in the Production of Economics and Business Majors Carlos Asarta, Ph.D. University of Nebraska, 2007 Advisor: William Walstad A linear education production function was estimated to identify the educational factors that contribute to the production and retention of the core business knowledge and basic academic abilities of graduating seniors at the college level. The data set used in this study was comprehensive and included information on the standardized test scores, demographic characteristics, ability levels, transfer status, major areas of study and core business course performance of 689 graduating seniors from the College of Business Administration (CBA) at the University of Nebraska-Lincoln (UNL). The production and retention of core business knowledge was influenced by a number of demographic, ability and transfer variables. Male students outperformed females in all four Major Field Test in Business (MFT-B) models, suggesting that gender is a significant factor in the production of core business knowledge. Other significant demographic factors included the age, ethnicity/race and nationality of graduating seniors. Entry SAT scores and core GPAs were highly significant in explaining the production of core business knowledge, while the transfer of core business courses from outside institutions negatively influenced the performance of students on the MFT-B. Economics major were the only students to exhibit a positive and significant MFT-B point advantage, while marketing students were the only major to score significantly lower than their business peers. The performance of students in the Principles of Macroeconomics, Business Law, and Principles of Finance courses contributed to significantly higher MFT-B scores. The transfer of Statistics, Principles of Accounting II and Business Law was detrimental to the production of core business knowledge. Finally, all majors but economics were less efficient at retaining core business knowledge when they transferred at least one core business course from an outside institution. The basic academic abilities of graduating seniors were unrelated to a student’s age or gender. White students, however, tended to exhibit significantly higher exit ability levels than students from other races/ethnicities. A student’s nationality and entry SAT scores were not found to significantly improve his/her basic academic abilities. Student performance in non-core courses, however, consistently explained student scores on the Collegiate Learning Assessment (CLA) test. The performance of students in Principles of Macroeconomics and Principles of Marketing positively influenced their exit academic abilities, while the transfer of the Business Law course offered at UNL was the only course transfer to influence the basic academic abilities of graduating seniors in a negative and significant way. Acknowledgements I would like to thank all those who have contributed to my success at the University of Nebraska-Lincoln during my undergraduate and Ph.D. studies: Professor William Walstad introduced me to the rich world of economic education and provided invaluable expertise in the field. Professor Walstad was always supportive of my dreams financially, intellectually and morally and stood by my side all along the way. Thank you, Professor Walstad, for your guidance and support. The members of my committee: Dr. Sam Allgood, for introducing me to the world of economics and providing guidance and support through my years at UNL; Dr. Craig MacPhee, for inspiring me to specialize in the field of international economics and providing timely feedback on my dissertation; and Dr. Fred Luthans, for always supporting my endeavors. The faculty of the Department of Economics at the University of Nebraska- Lincoln: Dr. John Anderson for extending a teaching assistantship to me and for believing in my intellectual and personal abilities; Dr. John Austin, for being a great mentor, colleague and friend; Dr. Roger Butters and Dr. Tammie Fischer, for extending numerous professional opportunities through the Nebraska Council on Economic Education and the UNL Center for Economic Education, and to all of those who believed in me and have made a difference in my academic and personal life. Special thanks go to Jan Hime and Lindsay Kruse for their support in locating the sources for the data used in this study. Sharon Nemeth was instrumental in proofreading and formatting the various documents included in this dissertation. Me gustaria darle las gracias a mis queridos padres, Alberto y Clara, por darme la education, ayuda y cariño necesarios para poder completar este sueno. Espero que esteis orgullosos de vuestro hijo. Finally, I would like to thank my wife, who has been supportive of my dream of becoming a doctor since day one. Your support, love and care for our family have allowed us to overcome the many obstacles encountered through the past five years. This dissertation is dedicated to you and to our beautiful children, Cristian and Kenedi. Table of Contents List of Tables i Chapter 1: The Nature and Objectives of the Research 1 Chapter 2: Literature Review 7 2.1 The Production Function Model 7 2.1.1 The Education Production Function 8 2.1.2 Educational Production Inputs 10 2.1.3 Educational Production Outputs 11 2.1.4 Conceptual, Methodological and Empirical Issues 13 2.2 Outcome Measures and Assessment 18 2.2.1 The Major Field Test in Business (MFT-B) 19 2.2.2 The Core Curriculum Assessment Program (CCAP) 22 2.2.3 The Collegiate Learning Assessment Instrument (CLA) 24 2.2.4 The Association to Advance Collegiate Schools of Business (AACSB) 26 2.3 Findings on Factors Affecting Educational Outcomes in Economics and Other Business Disciplines 28 2.3.1 Gender 29 2.3.2 Ability 32 2.3.3 Race and Ethnicity 35 2.3.4 Age and Class Standing 39 2.3.5 Transfer Status 41 2.3.6 Business Major 44 2.3.7 Course Grades and Overall Business Performance 47 2.4 Concluding Comments 49 Chapter 3: The University of Nebraska and the College of Business Administration 50 3.1 The University of Nebraska-Lincoln 50 3.1.1 Admission Requirements 51 3.1.2 Student Body Demographics 52 3.2 The College of Business Administration 57 3.2.1 The Business Senior Assessment Course (BSAD098) 61 3.2.2 Common Body of Knowledge Topics and Sequence 65 3.3 Concluding Comments 66 Chapter 4: Variables and Sample 68 4.1 Dependent Variables 68 4.1.1 MFT-B Score (MFTB) 68 4.1.2 CLA Score (VADDCLA) 69 4.2 Independent Variables 69 4.2.1 Student Gender (MALE) 71 4.2.2 Student Age (AGE) 72 4.2.3 Ethnic Background (WHITE, ASIAN, OTHER) 72 4.2.4 Student Citizenship (ORIGIN) 73 4.2.5 Transfer Status and Credits (TRANSFCORE/OTHER, TRANSFCORECR) 73 4.2.6 SAT Score (SAT) 74 4.2.7 Overall, Core and Other Grade Point Averages (GPA, CORE/OTHERGPA) 74 4.2.8 Student Major 76 4.2.9 Course Grades in the Common Body of Knowledge 76 4.2.10 Common Body of Knowledge Course Transfer (TRANSF+COURSE) 78 4.2.11 Student Major and Transfer Status (MAJOR+TRANSFCORE) 78 4.3 Descriptive Statistics 78 4.3.1 Descriptive Statistics on MFT-B Scores 82 4.3.2 Descriptive Statistics by Major 87 4.3.3 Descriptive Statistics on CLA Scores 92 4.4 Concluding Comments 97 Chapter 5: Estimation and Analysis 100 5.1 Main Variables and Descriptive Statistics 100 5.2 Estimation of MFT-B Models 105 5.2.1 Model 1: Choice of Major Effects on MFT-B Performance 105 5.2.2 Model 2: Core Course Achievement Effects on MFT-B Performance 111 5.2.3 Model 3: Transfer of Core Courses Effects on MFT-B Performance 122 5.2.4 Model 4: Choice of Major and Transfer Interaction Effects 131 5.3 Estimation of CLA Models 133 5.3.1 Model 5: Choice of Major Effects on CLA Performance 135 5.3.2 Model 6: Core Course Achievement Effects on CLA Performance 139 5.3.3 Model 7: Transfer of Core Courses Effects on CLA Performance 141 5.4 Concluding Comments 144 Chapter 6: Overview and Conclusions 147 6.1 Literature Review 148 6.2 Results 151 6.3 Implications 157 6.4 Limitations 162 References 165 Appendix 2.1: Major Field Test in Business Sample Questions 176 Appendix 2.2: Major Field Test in Business Content 181 Appendix 2.3: Standards for Business Accreditation 185 Appendix 3.1: CBA Senior Survey 192 Appendix 3.2: Career Placement Assessment Survey 198 Appendix 3.3: Required Core Business Courses, UNL 202 Appendix 4.1: Standard ACT to SAT Table 205 Appendix 5.1: Correlation Coefficients for Models 1-4 206 Appendix 5.2: Transfer Intensity on MFT-B Performance 210 [...]... are at maintaining their basic business and general ability levels because there is a time-lag between the moment they are presented with the materials and the time when they have to take the assessment instruments In this study, the efficiency of the different majors offered at UNL in retaining basic knowledge will be examined Of special interest is the retention of knowledge for the group of students... could further clarify and identify key inputs in the production and retention of knowledge The main purpose of this study is to identify the educational inputs that have a statistically significant effect in the production and retention of the core business knowledge and general basic abilities of graduating business students An educational production function was used to perform the production and retention... research findings and conclusions in the area of education production functions This section is organized as follows First, the reader can find a brief description of the theoretical model that will be used to assess the effect of different educational inputs on the production of academic business knowledge An overview of the inputs and outputs used in the literature, as well as a summary of the main conceptual,... still relatively small Information regarding the minors of graduating seniors, however, is available and will be included in this study Students minoring in economics are required to enroll in the same general economic courses as economic and business majors, but differ from all other business student because they receive economic training beyond the basic business requirement There are no known published... do students who major in a specific business area generate more educational output, in terms of core business knowledge, than similar students who major in other areas within the business curriculum? And if this is the case, are there other significant factors involved in such production? In other words, are accountants more productive, in terms of their core business knowledge and basic general abilities,... on the degree of “jointness” of production, the form of the production function, the variance of choices, the underlying decision rules for determining choices, and the accuracy of measuring inputs Becker (2004) suggests the use of a linear programming technique known as DEA (data envelope analysis) to evaluate the efficiency of decision-makers when multiple outcomes are present 15 Using discrete and. .. costs and scores reported The CCAP was developed by the American College Testing Program (ACT) in 1987 in response to the need for outcomes assessment in business schools The then 23 called American Assembly of Collegiate Schools of Business (AACSB) contracted with the ACT to create an instrument capable of measuring the general business core knowledge of business students The test includes questions in. .. populations Information regarding the initial administration and reliability of the CCAP (AACSB, 1987) reveals that the instrument was administered to an initial sample of 1,050 entering students and 972 graduating students in 14 institutions The reliability of the instrument was calculated for each of the 14 institutions by using the Kuder- 24 Richardson formula 20 Based on the data, the Kuder-Richardson... that include topics in Macroeconomics, Microeconomics and International Economics The Macroeconomics topics focus on national accounts and income determination, monetary and fiscal policy, the Federal Reserve System and employment, inflation and growth Microeconomics topics covered on the exam include market structures (i.e monopoly), price theory and supply and demand Finally, the balance of trade and. .. areas included in what is known by business schools and their accrediting agencies as the “Common Body of Knowledge” Such “Body” is assumed to include a common business core formed with knowledge in quantitative analysis, marketing, management, law, finance, economics, accounting and social and international considerations of modern business operations Questions in accounting, economics, management, and . areas of study and core business course performance of 689 graduating seniors from the College of Business Administration (CBA) at the University of Nebraska-Lincoln (UNL). The production and. assessment instruments. In this study, the efficiency of the different majors offered at UNL in retaining basic knowledge will be examined. Of special interest is the retention of knowledge for the. effect of different educational inputs on the production of academic business knowledge. An overview of the inputs and outputs used in the literature, as well as a summary of the main conceptual,