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National Collegiate ) Case No UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA, OAKLAND DIVISION IN RE: NATIONAL COLLEGIATE ) CASE NO. 14‐md‐2541‐CW; ATHLETIC ASSOCIATION ATHLETIC ) 14‐cv‐02758‐CW GRANT‐IN‐AID CAP ANTITRUST ) LITIGATION ) ) ) THIS DOCUMENT RELATES TO: ) ) ALL ACTIONS ) ) ) ) ) EXPERT REPORT OF PROFESSOR JAMES J. HECKMAN TABLE OF CONTENTS I. INTRODUCTION ............................................................................................................................... 1 A. Background ................................................................................................................................... 1 B. Scope of Work ............................................................................................................................... 4 C. Summary of Conclusions ............................................................................................................. 6 II. THE ECONOMICS OF HUMAN CAPITAL INVESTMENT PROVIDES A FRAMEWORK FOR ANALYZING THE IMPACT OF ATHLETICS ON VARIOUS OUTCOMES ................. 8 A. The Economics Literature on Human Capital Investments ..................................................... 9 III. DATA AND METHODOLOGY ...................................................................................................... 13 A. Overview ..................................................................................................................................... 13 B. Data .............................................................................................................................................. 14 C. Methodology ............................................................................................................................... 17 IV. EMPIRICAL RESULTS .................................................................................................................. 21 A. The Effects of Participation in High School Athletics - Summary ......................................... 21 B. The Effects of High School Athletics: High School Graduation ............................................ 22 C. The Effects of High School Athletics – Attending a Post-Secondary Institution .................. 23 D. The Effects of High School Athletics – Specific Findings by Socioeconomic Background and Race ..................................................................................................................................... 25 E. The Effects of Intercollegiate Athletics: Earning a Bachelor’s Degree ................................ 28 F. The Effects of Intercollegiate Athletics: Wages ...................................................................... 31 G. The Effects of Intercollegiate Athletics - Division I and FBS Students ................................. 32 V. CONCLUSION .................................................................................................................................. 40 I. INTRODUCTION A. Background 1. My name is James J. Heckman. I am the Henry Schultz Distinguished Service Professor of Economics in the Department of Economics and the Harris School of Public Policy at the University of Chicago. I direct the Center for the Economics of Human Development at the University of Chicago. 2. I specialize in the fields of Labor Economics, Applied Microeconomics and Econometrics, which is the application of statistical techniques to economic problems. In 1983, I received the John Bates Clark Medal, then awarded biennially, by the American Economic Association to the most distinguished economist under the age of 40. In 2000, I was awarded The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, commonly called the “Nobel Prize in Economics” for the “development of theory and methods for analyzing selective samples."1 I am a Member of the National Academy of Sciences, a Fellow of the American Academy of Arts and Sciences, a Fellow and former President of the Econometric Society, a Fellow of the American Statistical Association, a Fellow of the International Statistical Institute, a Fellow of the National Academy of Education, a Fellow of the American Association for the Advancement of Science, a Fellow of the American Academy of Political and Social Science, a Fellow of the Society of Labor Economics, a resident member of the American Philosophical Society and a Research Fellow of the American Bar Foundation. 3. I have published over three hundred peer‐reviewed articles in scholarly journals and compendia. I have authored or edited ten books. I currently serve as a Co‐Editor of the Journal of Political Economy, an Associate Editor of Econometric Reviews, and the Journal of Population 1 http://www.nobelprize.org/nobel_prizes/economic‐sciences/laureates/2000/ 1 Economics. I served a previous term as a Co‐Editor of the Journal of Political Economy. In addition, I previously have served as an Associate Editor of Evaluation Review, the Journal of Econometrics, the Journal of Labor Economics, the Review of Economic Studies, the Journal of Economic Perspectives, and Annual Reviews in Economics. 4. In addition to my academic experience, I have served as an advisor to the World Bank, the Inter‐American Development Bank, the United States Department of Labor, and the Ministry of Fiscal Equity of Argentina, and government agencies in Brazil, Taiwan, South Korea, Germany, Scotland and Ireland. I currently advise the Inter‐American Development Bank on the efficient design of human capital policies in Latin America. I previously served as a senior advisor to the China Development Research Foundation, the leading advisory group for the government of China on economic development policies. I serve on the boards of several foundations and chair initiatives for the study of human development. I also have presented testimony before committees of the United States Congress. I co‐direct the Human Capital and Economic Opportunity network of the Institute for New Economic Thinking. This group initiates, orchestrates, and facilitates the study of economic and social inequality in its multiple facets. 5. I have written extensively on the economics of human capital accumulation, the effects of educational choices on social and labor market outcomes, and many other aspects of labor theory. As part of this research, I have modeled and estimated the effects of various changes in policy on individual educational choices, and social and labor market outcomes.2 2 See for example my research on educational and labor market outcomes: “Economic, Neurobiological and Behavioral Perspectives on Building America’s Future Workforce,” (with E. Knudsen, J. Cameron and J. Shonkoff) World Economics, 7(3), July‐ September, 2006; “The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior,” (with J. Stixrud and S. Urzua), Journal of Labor Economics, 24(3), July, 2006: 411‐482; “Bias‐Corrected Estimates of GED Returns,” (with P. LaFontaine), Journal of Labor Economics, 24(3), July 2006: 661‐700; “Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond,” (with L. Lochner and P. Todd) in E. Hanushek and F. Welch, eds., Handbook of the Economics of Education, (North Holland: Amsterdam), (2006): pp. 307–458; “Labor Market Discrimination and Racial Differences 2 6. In performing my work in this matter, I have received assistance from Compass Lexecon personnel working under my supervision. I served as an expert in connection with the O’Bannon case and trial, prepared expert reports, was deposed and testified at trial. 3 The work in this report expands on and continues the work I reported on in the O’Bannon matter. My work is on‐going and I may revise or supplement my findings. I am being compensated at the rate of $2300 per hour. My compensation does not depend on the outcome of this litigation. My Curriculum Vitae, which includes a list of my expert testimony over the past four years, is attached to this report as Appendix A. in Premarket Factors,” (with P. Carneiro and D. Masterov), The Journal of Law and Economics, 48(1) 2005: 1‐39; “Understanding the Sources of Ethnic and Racial Wage Gaps and Their Implications for Policy,” (with P. Carneiro and D. Masterov), in R. Nelson and L. Nielsen, eds., Handbook of Employment Discrimination Research: Rights and Realities, (Springer), (2005): 99‐136; “China’s Human Capital Investment,” China Economic Review, 16(1): 50–70, 2005. “The Nonequivalence of High School Equivalents,” (with S. Cameron), Journal of Labor Economics, 11(1), (January 1993): 1‐47; “Determinants of Young Males’ Schooling and Training Choices,” in Lisa L. Lynch, (ed.), Training and the Private Sector : International Comparisons, (Chicago: University of Chicago Press, 1994): 201‐232; “On Policies to Reward the Value Added by Educators,” (with J. Cawley and E. Vytlacil), Review of Economics and Statistics, 81(4), (November 1999): 720‐727; “Should College Attendance be Further Subsidized to Reduce Rising Wage Inequality?” (with Stephen Cameron) in M. Kosters, (ed.), Financing College Tuition: Government Policies and Educational Priorities, (AEI: Washington, DC., 1999); “Rethinking Education and Training Policy: Understanding the Sources of Skill Formation in a Modern Economy,” (with L. Lochner) in S. Danziger and J. Waldfogel, (eds.), Securing the Future: Investing in Children from Birth to College, Chapter 2, (New York: Russell Sage Foundation, 2000): 47‐ 84; “Identifying The Role of Cognitive Ability in Explaining the Level of and Change in the Return
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