Month: April 2012

The shift to on-line education can happen gradually and easily

I left the following comment on Bryan Caplan’s blog post:

You don’t need to overturn all convention.  The top schools could shift at the margin, as they have many times in the past, and suddenly the conformist thing to do is to have ?? percent of your classes be on-line, and so on.  In virtually any other context you would see the flexibility of the market here!  No major credentials need to collapse, if it turns out that cannot happen easily.

This is a phantom issue, raised by many people but not thought through deeply enough.  Markets convexify (sometimes).

It is fine to argue “on-line education is not in fact more efficient.”  It is much harder to argue “if it is efficient, conformity pressures will keep it out of the market.”  Don’t confuse the former case with the latter.

Assorted links

1. Carrying costs > liquidity premium, German dead body edition.  Raise the price of a donation, I say.

2. Liquidity premium > carrying costs, German live body edition, disintermediation; “He meets 10 to 15 women a month.”  Recommended, I read it twice.

3. Jeff Sachs toys with the idea of a three-child limit for Nigeria (for fathers?  mothers?  probably de facto just the latter, then won’t it boost polygamy?).  In any case it would be a huge tax on rural Nigerians and it is a very bad idea, not to mention a massive violation of personal liberty.  Wouldn’t a more right-wing thinker have encountered a firestorm for a similar proposal?  (Addendum: a related set of links and commentary from Chris Blattman.)

4. More on Robert Caro.

5. Me in El Diario, on El Paso and Ciudad Juárez, sister cities of a sort, a wonderful near-controlled experiment on how the law influences our food (in Spanish).

Why is U.S. higher education so dominant? And why is Harvard #1?

Shailendra Raj Mehta reports:

The key innovation was alumni control of the Board of Trustees. This is what made possible several desiderata on the Rosovsky (1991) and (Aghion, Dewatripont et al. 2007) lists in the first place. This is what simultaneously allowed autonomy, continuity of purpose, large  endowments and the ability to weather turbulence. The role of alumni trustees has not been fully examined so far. Now, to be sure, Rosovsky does talk about the role of independent trustees. Certainly it is true that in one sense the trustees of US schools are often truly independent in that they provide a buffer against interference from the political and other domains. Further, they are usually able to take a view of the institution independent of the interests of the faculty. But, in fact, the trustees are not independent or uninterested observers at all. This is on account of the fact that the Board of Trustees, at least in the top US schools, consists primarily of alumni, the group which has the highest permanent stake in the reputation of the university.

…Therefore, whichever measure of school quality that we use – rank, school selectivity or endowment, we find that same result – the greater the degree of alumni control, the higher the quality of the school.

…so why is Harvard #1? This question, then becomes easy to answer. Except for a few brief years in its early days and a decade in the middle, for almost its entire existence, a period of nearly 400 years, Harvard has been controlled by its alumni.

The paper is here (pdf), interesting throughout.

Toward a 21st-Century FDA?

In a WSJ op-ed, Andrew von Eschenbach, FDA commissioner from 2005 to 2009, is surprisingly candid about how the FDA is killing people.

When I was commissioner of the Food and Drug Administration (FDA) from 2005 to 2009, I saw firsthand how regenerative medicine offered a cure for kidney and heart failure and other chronic conditions like diabetes. Researchers used stem cells to grow cells and tissues to replace failing organs, eliminating the need for expensive supportive treatments like dialysis and organ transplants.

But the beneficiaries were laboratory animals. Breakthroughs for humans were and still are a long way off. They have been stalled by regulatory uncertainty, because the FDA doesn’t have the scientific tools and resources to review complex innovations more expeditiously and pioneer regulatory pathways for state-of-the-art therapies that defy current agency conventions.

Ultimately, however, von Eschenbach blames not the FDA but Congress:

Congress has starved the agency of critical funding, limiting its scientists’ ability to keep up with peers in private industry and academia. The result is an agency in which science-based regulation often lags far behind scientific discovery.

Should we not, however, read the following ala Strauss?

The FDA isn’t obstructing progress because its employees are mean-spirited or foolish.

…For example, in August 2010, the FDA filed suit against a company called Regenerative Sciences. Three years earlier, the company had begun marketing a process it called Regenexx to repair damaged joints by injecting them with a patient’s own stem cells. The FDA alleged that the cells the firm used had been manipulated to the point that they should be regulated as drugs. A resulting court injunction halting use of the technique has cast a pall over the future of regenerative medicine.

A peculiar example of a patient-spirited and wise decision, no? And what are we to make of this?

FDA scientists I have encountered do care deeply about patients and want to say “yes” to safe and effective new therapies. Regulatory approval is the only bridge between miracles in the laboratory and lifesaving treatments. Yet until FDA reviewers can be scientifically confident of the benefits and risks of a new technology, their duty is to stop it—and stop it they will. (emphasis added).

von Eschenbach ends with what sounds like a threat or perhaps, as they say, it is a promise. Unless Congress funds the FDA at higher levels and lets it regulate itself:

…we had better get used to the agency saying no by calling “time out” or, worse, “game over” for American companies developing new, vital technologies like regenerative medicine.

Frankly, I do not want to “get used” to the FDA saying game over for American companies but nor do I trust Congress to solve this problem. Thus, von Eschenbach convinces me that if we do want new, vital technologies like regenerative medicine we need more fundamental reform.

Robert Sampson responds to my short book review

Prof. Cowen –  your Marginal Revolution blog earlier today was brought to my attention…A quick note on your selection/transparency comment, which I found of interest.  One of the ways that traditionally conceived “selection”/individual effects are neighborhood effects is when the former are an outcome of the latter.  It is common in the literature in sociology or psychology at least to see controls for the mediating pathways through which neighborhoods (or really, any context) might plausibly work.   For example, we typically see controls for all kinds of family and individual characteristics (including learning), almost all of which are at least potentially influenced by context.  Controlling them can thus have the result of eliminating the neighborhood coefficient, which is usually interpreted as evidence for selection as the governing process.  But in this example selection factors are themselves neighborhood effects, the basis in part for my reversing a common claim.   A number of recent papers independent of my own work have shown a variant of this process (e.g,  Although often technical, behind the development of these models is an important substantive point I think.   Part V of the book also delves into residential migration flows and higher-order structures as another kind of mechanism,  including how changing characteristics of neighborhoods influence residential selection.

More generally, I do not view choice/selection and context as an either/or proposition, and as an economist I am guessing you might agree. (Sociologists are typically structural determinists, but that is another story).  At Chicago I was influenced by Heckman and his arguments on modeling selection and the often misleading faith put on experiments as revealing causality).  Although I tried to examine neighborhood selection seriously, the main motivation of the book was to build up the social science of measuring and conceptualizing the neighborhood and spatial dimensions of social life.  Massey’s recent review of my book I think captures the essence of what I was trying to accomplish in terms of contextualizing human behavior and choice/selection —

The economics of Robert Caro

The two Bobs, Gottlieb and Caro, have an odd editorial relationship, almost as contentious as it is mutually admiring. They still debate, for example, or pretend to, how many words Gott­lieb cut from “The Power Broker.” It was 350,000 — or the equivalent of two or three full-size books — and Caro still regrets nearly every one. “There were things cut out of ‘The Power Broker’ that should not have been cut out,” he said to me sadly one day, showing me his personal copy of the book, dog-eared and broken-backed, filled with underlining and corrections written in between the lines. Caro is a little like Balzac, who kept fussing over his books even after they were published.

Can they not publish a “Director’s Cut” eBook?  The Power Broker, by the way, is in my view one of the best non-fiction books ever, so read it if you don’t already know it.

The article, from the NYT Sunday Magazine, is interesting throughout.  Note I have provided the “Single Page” link, I believe this helps you get through your quota of ten clicks at less expense.

Bryan Caplan’s signaling model and on-line education

The very useful model is here, and there is further commentary from Bryan here.  My question is this: does the model imply that on-line education should succeed, or not?

Let’s say that education signals conscientiousness.  A purely on-line class, with no ogre standing over your shoulder to discipline you, should be blown off by those who are not conscientiousness.  The on-line class would seem to offer a better signal and a cleaner separation of types.

Alternatively, let’s say education signals IQ or some other notion of “smarts.”  On-line education would seem to offer less opportunity to get through by buttering up the teacher, spouting mumbo-jumbo in basket-weaving classes, and so on.  For better or worse, a lot of on-line education seems to be based on relatively objective tests.  Then on-line education would seem to offer a better signal of smarts.

One possible application of Bryan’s model might be this.  Income inequality is rising, so there is greater care to get the signal, selection, and screening right for top jobs.  Relatively high levels of education should be all the more discriminatory, and that may mean more on-line education.  In fact, in normative terms that might well be a problem with on-line education, namely its inegalitarian nature with regard to curiosity and effort and smarts.

Oddly, the signaling model could be true, but through an invisible hand mechanism — schools competing to separate quality in the most effective ways — you can end up with a state of affairs where upfront signaling costs are fairly low.  Imagine a chess school, needing to sort talent, and unable to teach its students very much, but setting up a quite cheap on-line tournament and declaring some winners.  Aren’t the Khan Academy users some really talented people?

Alternatively, through an invisible hand mechanism, if the learning model is correct, you could end up with an equilibrium in which upfront signaling costs appear to be relatively high, namely that you impose “taxes” to make sure people end up learning what they need to know.  Think Paris Island or KIPP schools.

It is important not to confuse “seeing high upfront signaling costs” with “the signaling model of education is essentially correct.”  They sound like they should go together, but quite possibly they don’t.

Will Fairfax follow through with The Great Experiment?

Fairfax County schools could become the first in the Washington region to create a virtual public high school that would allow students to take all their classes from a computer at home.

No sports teams. No pep rallies. No lockers, no hall passes. Instead, assignments delivered on-screen and after-school clubs that meet online.

It’s a reimagination of the American high school experience. And it’s a nod to the power of the school choice movement, which has given rise to the widespread expectation that parents should have a menu of options to customize their children’s education.

Several School Board members, who will hear a formal proposal for the online school at a meeting Monday, said they are excited by the prospect.

The full story is here.

Huffington Post covers *An Economist Gets Lunch*

The interview is here, with Arin Greenwood, here is one excerpt:

For the world as a whole the main thing we need to do is invest more in increasing agricultural productivity. It’s really slowed down since the 1990s. It’s a major problem for at least one billion people. I think it’s much more important than what people like Michael Pollan usually talk about. For the U.S., I think we should have a carbon tax, for environmental reasons.

I think as individuals, people overrate the virtues of local food. Most of the energy consumption in our food system is not caused by transportation. Sometimes local food is more energy efficient. But often it’s not. The strongest case for locavorism is to eat less that’s flown on planes, and not to worry about boats.

And this:

This will sound a little strange coming from me. The two dynamic sectors now are hamburgers and pizza.

And this:

There are any number of places with good decor and great food, they just cost a very high price. Most people don’t want to eat at those places on a regular basis for reasons of money or time, or just the sheer oppression of having to dress up and go to a nice place all the time.

You can order the book on Amazon here.  For Barnes & Noble here.  For here.

The peculiar case of higher education

Via a request from Ezra for topic coverage, here are some very good remarks from Ryan Avent.  Excerpt:

A sector dominated by the state—state-run in some cases, merely subsidised and regulated in others—is, I think most Americans would agree, both a major contributor to American prosperity and one of America’s most competitive industries on foreign markets, despite its glaring inefficiencies. What ought we to conclude based on this example?

Certainly, one could reasonably argue that the sector would be even better if state control were relaxed, monopolies broken up, subsidies curtailed, and market controls (like those on immigration) eliminated. But one also has to wrestle with how different the American economy would look if the state had never muscled public universities (including a broad network of technology-driven, extension-oriented schools) into existence.

This stuff is harder than we often pretend.

A few observations:

1. Postwar higher education has proven one of America’s most effective subsidies, and it has paid for itself many times over.  It is also one of the more significant successes of federalism.

2. We are fortunate that U.S. state universities are more or less autonomous, compared to the Continental model where professors and administrators are treated as part of the state civil service bureaucracy.  The latter system does not work well, and those countries have struggled to move closer to American models.

3. To refer back to a distinction from the David Brooks column, we should not be trying to squeeze the entire economy into the shoebox of the dynamic but risky “Economy I.”  For public choice reasons, as well understood by Karl Polanyi (an underrated public choice theorist if there ever was one), the polity requires some respite from Economy I, whether we like that or not.  Read also this analysis by Interfluidity, which is one of my favorite blog posts of all time.  Furthermore the more “sluggish” Economy II, by operating under different principles, often serves as a useful R&D lab for Economy I.  Think MIT and Stanford, or note that Adam Smith ended up as a customs commissioner, as his father had been.  Goethe and Bach worked for governments for much of their lives.  It’s about balance and synergy, though it is perfectly fair to see contemporary Western Europe, especially in the periphery, as a region which has far too much Economy II and too little Economy I.

4. Maintaining the truth of #1 will prove a significant challenge going forward.  It’s not about blaming the critics or defunders of state universities, or the critics of public subsidies to private universities.  The real problems are a few.  First, successful state programs tend to stultify and decline over time, and if nothing else the danger is that health care costs will eat up state budgets.  Second, the absolute returns to higher education (as opposed to the wage for not going) are not currently high enough to maintain the current fiscal structure of those institutions, furthermore those fiscal structures do not have so much “give,” due to tenure and various self-imposed cost inflexibilities.  Third, although most state universities have relatively little explicit debt, they are implicitly massively leveraged through reliance on ongoing tuition boosts, ongoing enrollment boosts, and timely retirements, none of which can be counted on in the future.

It will prove a daunting path forward.

Addendum: David Henderson comments.


Is the lap dancer sector being brought down by finance?  Is the British knowledge base being eroded?

The study by Teela Sanders and Kate Hardy from Leeds University warns of “de-skilling” across the industry. Dr Sanders said many dancers had “never even used a pole”.

Researchers carried out a survey of 200 lap dancers, the largest study of its kind in the UK, it was reported.

Dr Sanders said there had been a “real change” to the “aesthetics of the dancers” as well as “the skills of flirting and chatting”.

The study is due to be presented today at the British Sociological Association’s annual conference in Leeds, according to The Times.

Here is much more, and I thank a loyal MR reader, WM, for the pointer.