Abstract

Using the instrumental variable two stage least square (IV2SLS) and generalised method of
moments (IVGMM) estimations, this paper investigates the relative importance of a wide
range of variables on student performance in multiple choice and short answer questions in
a first year principles of economics (PE) subject. The multi-year data set provides detailed
demographic and performance characteristics of 2186 students enrolled in a major multicampus
university. Results from IVGMM and IV2SLS estimation indicate that higher levels
of mathematics and economics taken prior to university are associated with significantly
improved student performance in PE. Results also indicate that prior economics knowledge
has more influence than prior mathematics knowledge on student performance in
PE. Students with better understanding of mathematics perform significantly better in
multiple choice questions. On the other hand, prior mathematics knowledge does not
significantly affect the marks in short answer questions.