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Economics

Senior Thesis

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What is an economics thesis?

The Senior Seminar gives you an opportunity to use what you’ve learned in your economics courses to write a Senior Thesis that addresses a question of your choosing. Here are examples of questions that have been addressed in past senior theses:

  • Are state treatment programs efficient responses to pathological gambling?
  • Is the clustering of restaurants a key determinant of success in Portland?
  • How are prices for downtown parking determined?
  • How does foreign direct investment affect economic growth?
  • What are the costs and benefits of Portland’s bicycle policies?
  • What is the link between land reform, rice production, and poverty in the Philippines?
  • What the costs and benefits of food cooperatives?
  • Are buses more efficient than light rail?
  • What were the costs and benefits of “Cash for Clunkers?”
 Theses from Alums

The process of economic research

There is a well-established four step process for economics research.

  1. Find a Question.  Economic analysis can be harnessed to answer all sorts of questions, theoretical and empirical.
  2. Survey and Critique the Literature. In most cases, a literature survey will reveal a wealth of previous work on related questions, along with methodologies that can be used to answer the question.  In addition, a critique of the literature will reveal opportunities to improve on earlier work by correcting errors and extending the analysis to answer other economic questions.
  3. Design a Methodology.  In the design phase, a researcher abstracts from the realities of data collection and other practical concerns, and describes the analytical and empirical methods to be employed in an ideal world of complete data and transparent mathematics.  As explained below, there are three general methodologies commonly used: hypothesis testing, benefit-cost analysis, and economic modeling.
  4. Implement the Design.   In the implementation phase, a researcher provides a new contribution to the literature.  For an empirical question, a researcher collects the relevant data and then tests a hypothesis or does a benefit-cost analysis.  For a theoretical question, a researcher use mathematics and economic logic to construct an economic model and explore its properties.  

What are the alternative methodologies?

Economic research employs a number of methodologies, and your choice of a methodology will be determined by your question.  Most students in Senior Seminar will adopt one of the following.

  1. Test a Hypothesis: 

    You can use regression analysis or other statistical methods to determine the direction or magnitude of the relationship between two variables. Your choice of econometric methods will be guided by your literature survey as well as your review of methods presented in courses in statistics and econometrics. The key design question for step three of the process is, “What econometric methods would you use to test your hypothesis, and what data would you collect? 

    A project that tests a hypothesis is grounded in economic theory.  To motivate the hypothesis testing, you will use economic theory to explore the qualitative or quantitative relationship between two variables. 

    Qualitative.  In many cases, the qualitative relationship is logically indeterminate, setting the stage for a test of whether the relationship is positive, negative, or nonexistent.  For example, Does an increase in the interest rate increase or decrease saving?

    Quantitative

    .  In almost all cases, the quantitative relationship between two variables cannot be determined by theory, setting the stage for estimating an elasticity, i.e., the responsiveness of one variable to changes in the other variable.  For example, What is the elasticity of housing prices with respect to local crime rates?

  2. Estimate the Benefits and Costs of a Public Policy: 

    You can use benefit-cost analysis to measure the tradeoffs associated with a particular public policy.  The literature survey will reveal the tradeoffs—the benefits and costs, the winners and losers—of a particular policy, setting the stage for a policy analysis that quantifies the benefits and costs.  To develop your the benefit-cost methodology, you are likely to employ methods that have been used in other sorts of policy analysis. The key design question is, “What sorts of costs and benefits are generated by a public policy, and what data would you collect to measure the benefits and costs?” 

    A benefit-cost analysis is grounded in economic theory.  A public policy generates benefits for some economic agents and costs for others, and these benefits and costs are often subtle and overlooked by policy makers.  You can use economic theory to reveal the positive and negative consequence of a public policy, setting the stage for a benefit-cost analysis.  For example, the Portland Streetcar has an annual cost of about $7.1 million, and generates benefits because it decreases travel times, congestion, and air pollution.   The questions are (i) Do the benefits exceed the costs, (ii) Who bears the  cost, and (iii) Who gets the benefits? An important part of policy analysis is sensitivity analysis—computing costs and benefits with different sets of assumed parameter values.

  3. Economic Modeling: 

    You can use formal mathematical logic to construct an economic model and explore its properties.  For example, you could derive the conditions that describe an equilibrium and derive comparative-statics of the equilibrium.  Or you could compare the equilibrium to the social optimum, revealing a market failure. New theory builds on old theory, and you are likely to start with an existing theoretical framework, extending the analysis to answer a new question.  The key design question for step three in the research process is, “What sort of economic model will you construct, and how will you use it to answer your question?” For example,  using auction theory as a starting point, you could prove that local tax subsidies for manufacturers promote economic efficiency.


The faculty of the Economics Department will review the completed thesis papers of honors-eligible students to determine whether they will be awarded honors.