Category Archives: Economics of Education

Future Job Growth

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From the WSJ;

Personal-care aide will be the fastest growing job from 2012 to 2022, among categories with more than 25,000 positions, the Labor Department said in a new report. The field will grow by nearly 50% to 1.8 million jobs.

I could envision a scenario in which personal services of all sorts become more important. For example, here is an idea from IBM.

by next year, Watson will be your personal shopping assistant. Store associates will also have similar intelligent tech providing them instant product information, customer loyalty data, sales histories, user reviews, blogs and magazines, so that when you do need to talk with another human, they know exactly how to help.

IBM thinks in terms of technology it can sell to large enterprises. I tend to think in terms of disintermediation, in which large enterprises are no longer needed.

So IBM thinks about adding personalization to an existing classroom. I think about getting away from classrooms and going back to tutors. Imagine a world with tutors instead of schools.

Schools keep you kids around all day, and thereby waste most of the day. For parents, that is as much a feature as a bug, because they need schools to supervise their kids. But if you were to re-organize schooling into a day-care component and a tutoring component, you might find benefits in getting rid of the enterprise that we call a school.

So we might find that in the future there are fewer school administrators and fewer classroom teachers, but there are a lot more day-care supervisors and tutors.

My Review of Lant Pritchett

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On the economics of education. The review starts,

In The Rebirth of Education: Schooling Ain’t Learning, development economist Lant Pritchett describes the challenges of education in underdeveloped countries. Because so many of the problems that he identifies are endemic to centralized, state-run education systems, I view the book as an instant classic in a genre that might be termed “applied libertarianism.”

I really think that the book deserves much more play. You may recall that I recommended the podcast in which Russ Roberts talked with Pritchett about the book.

Are $20 Bills Getting Picked Up?

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Don Peck writes,

I spoke with managers at a lot of companies who are using advanced analytics to reevaluate and reshape their hiring, and nearly all of them told me that their research is leading them toward pools of candidates who didn’t attend college—for tech jobs, for high-end sales positions, for some managerial roles. In some limited cases, this is because their analytics revealed no benefit whatsoever to hiring people with college degrees; in other cases, and more often, it’s because they revealed signals that function far better than college history, and that allow companies to confidently hire workers with pedigrees not typically considered impressive or even desirable. Neil Rae, an executive at Transcom, told me that in looking to fill technical-support positions, his company is shifting its focus from college graduates to “kids living in their parents’ basement”—by which he meant smart young people who, for whatever reason, didn’t finish college but nevertheless taught themselves a lot about information technology. Laszlo Bock told me that Google, too, is hiring a growing number of nongraduates. Many of the people I talked with reported that when it comes to high-paying and fast-track jobs, they’re reducing their preference for Ivy Leaguers and graduates of other highly selective schools.

The article is about data-driven personnel practices. It reads like something out of Average is Over.

Russ Roberts and Lant Pritchett

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Talking about Pritchett’s new book, which I really liked. Here is an excerpt from the podcast.

I do mention that Clay Christiansen has this idea of disruptive innovation. Which is where you actually moves to something that looks like lower quality but then rebuild a higher quality on top of that. The classic example of course is the PC (personal computer), which in computing terms when it came out in 1980 was a garage hobbyist toy that no serious computer engineer would pay any attention to. And all the firms that ignored the incipient disruptive innovation of the PC got themselves blown away by this, at the time, low-quality alternative. So I do think technology is going to change the way classrooms are managed in ways that are going to look disruptive, in the sense that they may appear to be de-skilling the classroom. But I think that in the long run there will be a disruptive innovation in the developing world that will rapidly accelerate the rate at which they can close on these higher levels of schooling. But when I hinted at this chaos–it’s going to be very chaotic. It’s going to be lots of people doing things that don’t look like finished classrooms, but produce incredible gains, and they are going to reconstitute a new way of doing education.

Keep in mind that I believe in the null hypothesis, which is that no education technique makes a big difference in terms of outcomes. Pritchett’s book actually offers a lot of support for that hypothesis, in that many results that he reports show little or no difference. However, he does offer one example, from Pakistan, in which giving parents “report cards” on school performance puts pressure on schools to improve and leads to some significant gains in the context of a controlled experiment.

Skeptics on Pre-School

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Grover J. “Russ” Whitehurst writes,

Unfortunately, supporters of Preschool for All, including some academics who are way out in front of what the evidence says and know it, have turned a blind eye to the mixed and conflicting nature of research findings on the impact of pre-k for four-year-olds. Instead, they highlight positive long term outcomes of two boutique programs from 40-50 years ago that served a couple of hundred children.

Pointer from Tyler Cowen. I take the first sentence to be a swipe at James Heckman.

Whitehurst summarizes the results of a larger, more recent study, and concludes

This is the first large scale randomized trial of a present-day state pre-k program. Its methodology soundly trumps the quasi-experimental approaches that have heretofore been the only source of data on which to infer the impact of these programs. And its results align almost perfectly with those of the Head Start Impact Study, the only other large randomized trial that examines the longitudinal effects of having attended a public pre-k program. Based on what we have learned from these studies, the most defensible conclusion is that these statewide programs are not working to meaningfully increase the academic achievement or social/emotional skills and dispositions of children from low-income families.

I received a review copy of The Smart Society, by Peter D. Salinas, a former provost for the State University of New York. Unlike me, he takes a fairly optimistic view that school reform can have a big effect on outcomes. Continue reading →

What I’m Reading

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The Rebirth of Education: Schooling Ain’t Learning, by Lant Pritchett. In short, it is an informed polemic against top-down, state-run school systems in underdeveloped countries, notably India. Tyler Cowen mentioned it, but otherwise it has received no play anywhere. Maybe it is just too contrary to conventional wisdom for people to grasp.

It is possibly the best book I have read this year. It immediately vaults onto the list of libertarian classics. This is in addition to being an important book about education in underdeveloped countries.

I will have to finish it and then re-read it before writing a more comprehensive review.

Bimodal Salaries, Unimodal tuition?

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Peter Turchin writes,

the left peak has hardly advanced and is currently (as of 2011) located at $50K. Given that the debt burden of an average law school graduate is twice that (over $100K), it means that for all practical purposes the individuals in the ‘loser’ category will never be able to repay their loans. In other words, the group of elite aspirants who have gone to the law school since 2001 have been sorted into two completely separate categories: those who succeeded in entering the top ranks of the elites and those who have failed utterly, with very few people in between.

Read the whole thing. Pointer from Tyler Cowen.

It appears that there are two markets, one for elite lawyers and one for ordinary lawyers. However, law school tuition is relatively homogeneous. At some point, I would expect to law school tuition fall sharply at all but the elite institutions.

Judging the Education Olympics

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Timothy Taylor writes,

The OECD has also published its own first tabulation of these results, with much additional discussion, in OECD Skills Outlook 2013: First Results from the Survey of Adult Skills. It note that only three countries have below-average scores in all of these domains: along with the United States, the other two are Ireland and Poland. In a fact sheet summarizing the US results, the OECD writes: “U.S. performance is weak in literacy, very poor in numeracy, but only slightly below average in problem solving in technology-rich environments.”

Taylor sees this as an indictment of the U.S. educational system. I am not confident that better teaching methods would have produced adults with more skills. However, I am pretty sure that we could have gotten the same mediocre results while spending a lot less money.

Is Age the Key Variable?

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The Guardian reports,

in England, adults aged 55 to 65 perform better than 16- to 24-year-olds at foundation levels of literacy and numeracy.

Pointer from Tyler Cowen. Several of his commenters raise the issue that seemed obvious to me: how much of this reflects the higher number of immigrants in the younger cohort?

Remember that the null hypothesis is that schooling practices do not matter. That would imply that the problem of the younger generation is not that schools in England have gotten worse.

Two Recommendations From Reihan Salam

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I. On higher education, he recommends a proposal for a $10,000 degree, written by Anya Kamenetz. She concludes,

Making college affordable—without loans—by stripping it of its perks, refocusing the mission on education, using new technology in a blended learning model, and cutting administrative costs could be one of the most important economic boons for the middle class and the poor. Graduating students with massive debt—and even worse, failing to graduate students who acquire massive debt—is the worst way to start young people toward meaningful and productive lives. Change is hard, but colleges need to do so to fulfill their mission of preparing subsequent generations to succeed.

If you’re so smart, why aren’t you an entrepreneur? That is, what is stopping someone from starting a college like this and making a killing? Some possibilities:

1. The credentials cartel is too strong. You cannot get accreditation unless you waste a lot of money on admin, old-fashioned teaching methods, and non-educational resources.

2. The consumers are too stupid. Students will not to go low-cost, efficient schools. They would rather run up big debts an high-cost, inefficient schools.

3. Entrepreneurs are stupid. Only policy wonks can come with ideas like this.

I have to say that I really get annoyed when policy wonks write as if the answer is (3). The whole Obamacare thingy fits in that category. If health insurance exchanges are the answer to affordable health insurance, what was stopping entrepreneurs from creating them? (And if your answer is “moral hazard,” your assignment is to read David Hogberg’s essay, which describes the logic of paying the fine until you get sick under Obamacare) What is it that is stopping insurance companies from compensating doctors on the basis of outcomes rather than procedures, if that is so great?

II. On poverty programs for an Average is Over world, he recommends an article by Oren Cass, who writes,

Rather than have numerous federal agencies each administer numerous programs, the federal government would ideally have a single agency apply a formula, establish the year’s lump-sum payment for each state, and transfer the funds. Call it the Flex Fund. States happy with the existing funding allocations and program structures could continue to apply the funding as they do today. But states with better ideas—even radically different ones—would be free to pursue them.

Also,

An adjustment in benefit types offers the best opportunity to incentivize work without slashing benefits or increasing spending. Two families—one whose head of household works, one whose head of household does not—may both need $3,000 worth of nutritional support. But if the non-working household receives the $3,000 in food stamps while the working household receives it as cash via a wage subsidy, the latter might feel substantially better off. While the Affordable Care Act draws an arbitrary line, providing Medicaid to those below 138 percent of the poverty line and a subsidy for private insurance to those above 138 percent of the poverty line, the benefit could instead be provided as Medicaid for those who do not work and, for those who do work, as additional cash provided via wage subsidy.

Changing some income-support programs to wage subsidies sounds like a good idea to me. The Flex Fund I’mm no so sure about. Many wonks have thought in terms of replacing food stamps, Medicaid, and the rest with a simple cash assistance program. Cass is suggesting replacing all the Federal programs with a state program. Will the states make fewer mistakes with the money than individual poor people? My guess is “no.” Also, if the money comes from the Federal government, how strong is the incentive for states to use it well? If a state puts together an inefficient transfer system, funded by the Feds, how much will voters care?