Category Archives: Economics of Education

Genes and Environment

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This week’s links from Jason Collins are interesting, as usual. For example, Alison Gopnik writes,

When psychologists first started studying twins, they found identical twins much more likely to have similar IQs than fraternal ones. They concluded that IQ was highly “heritable”—that is, due to genetic differences. But those were all high SES twins. Erik Turkheimer of the University of Virginia and his colleagues discovered that the picture was very different for poor, low-SES twins. For these children, there was very little difference between identical and fraternal twins: IQ was hardly heritable at all. Differences in the environment, like whether you lucked out with a good teacher, seemed to be much more important.

If you read this paragraph, you may pick up inferences that I suspect are not supported by the data. One inference is that IQ is not heritable among low-SES children. I do not know much about genetics, but it is hard for me to see how a characteristic can be heritable at one SES level but not at another. Yes, I can see how a characteristic can be affected by the environment at one income level but not another.

The other inference is that what accounts for the difference in IQ between two low-SES children could be having “lucked out with a good teacher.” There is no evidence that teachers have anything to do with this.

College: Who is the Consumer?

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Mike Gibson has a piece on the bundle that is college education.

Taken together this is like an awful cable TV package. To get HBO, you also need to pay high prices for all those unwatchable stations like the Hallmark Channel. The future of higher education will involve unbundling this package and offering cheaper, higher quality substitutes.

Many of us have said that there is some potential to unbundle college. Gibson points to Reid Hoffman’s recent piece on separating out the credential.

Ten years ago, I wrote,

A generation from now, the most successful colleges may be the ones that provide the best aesthetics, while outsourcing the actual function of education.

It may be a mistake to make forecasts about the economics of college based on what we presume that students want, or even based on what we presume that parents want. Suppose that the most influential consumers of college are government and wealthy donors. If those consumers want bundling, then they will get bundling.

Consider the possibility that the biggest implication of Average is Over is the growth of toadyism. Be careful about predicting the evolution of goods and services based on consumer sovereignty. Instead, make your predictions on the basis of what will help in pleasing the very rich and the politically powerful.

Ashok Rao’s Platform

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I like much of it, but not this:

Get rid of the Department of Education and allocate every child into school by a random lottery. Public education is a bit (but not really) like the individual mandate. It works well if everyone uses it without segregation. There are big externalities in moving a rich kid from his bubble of a rich school to a poorer school…

Maybe Albert Hirschman would like this. I agree that we schools tend to segregate by income class. However, I disagree that public education “works well” as long as you get rid of income segregation.

Overall, he says that his list of points is “clearly progressive,” but “a bit of stuff…should appeal to a libertarian.” More than a bit, actually. I recommend reading his whole post.

Pointer from Tyler Cowen.

Average is Over, Boys and Girls

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Christina Hoff Sommers writes,

Women still predominate—some­times overwhelmingly—in empathy-centered fields such as early-childhood education, social work, veterinary medicine, and psychology, while men prevail in the mechanical vocations such as car repair, oil drilling, and electrical engineering.

If she would read Tyler Cowen’s new book, she would understand that “empathy-centered fields” have been trending up in demand, because that is where humans have a comparative advantage in a world where computers and robots keep getting better. In addition, Cowen argues that complex businesses require teamwork, not the sort of oppositional, maverick attitude that comes more naturally to males. I read Average is Over as implying that we should not blame the deteriorating outcomes for average males on feminist prejudice in education.

Evidence for Teach for America

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In this study by Mathematica.

TFA teachers were more effective than the teachers with whom they were compared. On average, students assigned to TFA teachers scored 0.07 standard deviations higher on end-of-year math assessments than students assigned to comparison teachers, a statistically significant difference. This impact is equivalent to an additional 2.6 months of school for the average student nationwide.

They captured data on TFA teachers and non-TFA teachers, and nothing in the data (e.g., their educational backgrounds) predicted this result. Even though this study was carefully conducted, my prediction is that it will not hold up over time. I put my faith in the null hypothesis in education.

U.S. Teachers and Foreign Teachers

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About a new OECD study, Timothy Taylor writes,

The quick bottom line: the average U.S. teacher faces a similar student/teacher compared to the average for teachers in other countries, but the relative pay of US teachers compared to the average wage is lower than the similar ratio in many countries, and the number of hours worked by US teachers is higher than in other countries.

It is possible that this shows that U.S. teachers are underpaid. However, I would be interested in the ratio of non-teaching staff to teaching staff in the U.S. vs. elsewhere. When I looked into Montgomery County, Maryland a few years ago, it seemed that the ratio of students to classroom teachers was more than double the ratio of students to employees. Suppose that the ratio of non-teaching staff to teachers is much higher in the U.S., which is what I suspect is the case. Perhaps those non-teachers help make life easier for teachers, in which case perhaps our teachers are not underpaid. Or perhaps those non-teachers do not help (they may even add work).

In any case, if you raise salaries in U.S. public school education, a huge amount of that money will go for non-teaching staff. I think we ought to know more about what those non-teaching staff contribute before we throw more money at them.

Other random issues to toss into the mix:

1. In at least some non-U.S. countries, teachers come from a higher part of the IQ distribution. In theory, we could get more able teachers by paying more money, but we also might have to change the role of unions.

2. There is very little reliable evidence linking education inputs to outcomes.

I would prefer to see parents spending their own money on education. If they believe that paying for schools with high teacher salaries is a good idea, then we will arrive at an equilibrium with high teacher salaries. If not, then we won’t. I am comfortable with what emerges, especially considering (2).

Textbooks and the Cloud

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Frances Woolley writes,

When a new textbook costs $150 or $200, the maximum fine for downloading copyright material is $5,000, and the probability of being caught and convicted is fairly low (especially for those who know how to take appropriate precautions), it is surprising that anyone actually buys textbooks.

This suggests that textbooks may not end up as e-books. Instead, a textbook might be a web service delivered from “the cloud.” To me, this makes more sense educationally as well as economically. The e-textbook should not just be apdf file. It should be interactive.

Education, Status Goods, and Economics

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Rory Sutherland makes a valid point about education.

while we may want everyone else to be equally healthy (bee), we want our children to receive a better education than our neighbour’s children (chimp). If parents were more honest about their chimp heritage, they might also admit that, when choosing a school, they care less about the staff or the facilities (something government might solve) than about placing their children within an appropriate peer-group (something it can’t).

Pointer from Jason Collins. I agree that status-seeking plays a role in education, but I disagree that it plays no role in health care.

However, Sutherland goes overboard in his description of life as “Darwinist.” He focuses on status as a zero-sum game. The point that economists make is that while this game is going on, there is also a positive-sum game, involving trade, innovation, and growth.

Cowen vs. Caplan

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Tyler Cowen writes,

I postulate the wage return to signalling as going away within five years, in say a career of forty years

Some remarks:

1. Why does Bryan have to ask anyone’s opinion about the relative weight of signalling? Perhaps because this question may never be settled empirically. If it could be settled easily, then that $20 bill would have been picked up by now. If it cannot be settled easily, then perhaps the reason is that the signalling model is in many respects “observationally equivalent” to the human capital model.

2. Tyler is suggesting that the signalling proportion of the wage premium for a college degree ought to decay as employers learn from experience about workers, reducing the premium they are willing to pay for an old signal. On the other hand, human capital obtained in school might not decay to the same extent. However, I am confident that someone can come up with a signalling story that is consistent with persistence of a premium or come up with a human capital story that is consistent with decay.

Some Thoughts on Higher Education

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From Megan McArdle

it is [among] the graduate schools that the collapse has begun. That doesn’t mean that graduate education will go away (after all, neither tulip bulbs nor stock exchanges went away when those bubbles collapsed); rather, the market will get dramatically smaller, with the shakiest programs going bust, others retrenching, and the top ones continuing to draw more students than they can enroll. If it spreads to college, we should expect to see the same pattern: top tier schools surviving and even thriving, while lesser ranked schools pitched into financial crises by declining enrollment.

In some sense, the most fundamental question about the economics of higher education is: what it the relevant margin along which a degree adds to an individual’s future earnings?

In particular, if there is a marginal return of close to zero for “additional students who otherwise would not have been pursuing the degree,” then a lot of people need to stop and think.

On a possibly related note, Bryan Caplan is looking for uncharitable reasons for economists to stick to the human capital model of education.

I go with social pressure/ideology. Progressive ideology is in the DNA of the American Economic Association. In downplaying ideology, Bryan is treating Republican allegiance as if it were a proxy for classical liberalism. I see Daniel Klein’s research on the profession as suggesting otherwise.

By the way, I take a similarly uncharitable view for explaining the persistence of Quackroeconomics.