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152 Chapter 3 Review of Statistics

b. Using the sports-card data, what fraction of the subjects traded the
good they were given? Is the fraction significantly different from
50%? Is there evidence of an endowment effect? (Hint: Review
Exercises 3.2 and 3.3)

c. Some have argued that the endowment effect may be present, but
that it is likely to disappear as traders gain more trading experience.
Half of the experimental subjects were dealers, and the other half
were nondealers. Dealers have more experience than nondealers.
Repeat (b) for dealers and nondealers. Is there a significant differ-
ence in their behavior? Is the evidence consistent with the hypothesis
that the endowment effect disappears as traders gain more experi-
ence? (Hint: Review Exercise 3.15).

A p p e n d i x

3.1 The U.S. Current Population Survey

Each month, the U.S. Census Bureau and the U.S. Bureau of Labor Statistics conduct the
Current Population Survey (CPS), which provides data on labor force characteristics of the
population, including the levels of employment, unemployment, and earnings. Approxi-
mately 60,000 U.S. households are surveyed each month. The sample is chosen by ran-
domly selecting addresses from a database of addresses from the most recent decennial
census augmented with data on new housing units constructed after the last census. The
exact random sampling scheme is rather complicated (first, small geographical areas are
randomly selected, then housing units within these areas are randomly selected); details
can be found in the Handbook of Labor Statistics and on the Bureau of Labor Statistics
website (www.bls.gov).

The survey conducted each March is more detailed than in other months and asks
questions about earnings during the previous year. The statistics in Tables 2.4 and 3.1 were
computed using the March surveys. The CPS earnings data are for full-time workers,
defined to be somebody employed more than 35 hours per week for at least 48 weeks in
the previous year.