What happens if you expand higher education?

This is based on Italian data from the 1960s:

However, I also find that those induced to enroll earned no more than students in earlier cohorts who were denied access to university. I reconcile these surprising results by showing that the education expansion reduced returns to skill and lowered university learning through congestion and peer effects. I also demonstrate that apparently inframarginal students were significantly affected: the most able of them abandoned STEM majors rather than accept lower returns and lower human capital.

Uh-oh.  The good news, however, is that the children of these individuals seem to have ended up in higher-paying jobs.

That is from Nicola Bianchi (pdf), he is now at Northwestern.  For the pointer I thank Robin Gaster.

Comments

Italian universities are a joke though. Everyone knows this.

Which is a problem here. Because what are they measuring? As European universities have taken more students standards have also dropped. Italian universities are, by all accounts, rife with petty corruption, sexual exploitation, nepotism and political vendettas. Teaching has more or less stopped. What students learn, they more or less learn on their own.

So what are they measuring?

Maybe we can do a nice linear plot of university jokeness vs proportion of students in cohort?

You get unemployed commies.

Surely SOMEONE gained as a result of there being more high-skill, high-productivity people?

How is it possible that you gave more people more skills and all of society was worse off?

Actually, that's a good question. Did expanding education actually increase the skill and productivity of the population? Or was the net effect simply handing diplomas to the marginal student without an increase in skill?

The skills are irrelevant for the available jobs and there are costs.

Also people pickup skills on the job. Perhaps less skills but more job targeted skills.

You assume that an education gives you more skills.

If you move outside elite institutions, only the top 5-10% in class gain adequate skills, the rest prove they couldn't make it.

Higher education has been mostly about teaching the smart people lots of stuff, and expanding the availability gets more smart people educated. To a point. From then it becomes credentialing the less intelligent, which for a while worked fine because it happened to coincide with the expansion of the civil service which needed a bunch of credentialed but not too bright people.

But that has turned into a shrinking or replacement destination, so now the expensively educated not too bright end up populating the internet with pithy comments but have trouble doing anything real. There are lots of hungrier, cheaper and less entitled folks elsewhere to do what they are capable of.

But how do you explain the persistently higher earnings and much, much lower unemployment rates of college graduates? Surely if only the top 5-10% of the moronic masses in college today actually learned anything useful, you'd be seeing it in US (even Canadian) data by now.

Signalling, arrow of causality pointing the other way, and "this person has a college degree therefore he should be paid more."

How do you explain the persistently higher earnings and much, much lower unemployment rates of Ferrari owners?

There is a distribution of incomes for those college degrees.

"Today, 15 percent of US taxi drivers have a college degree, up from less than 1 percent in 1970."

The nail in the coffin of the human capital expanding model of higher education is that people who have completed 3 years of higher education have almost none of the games help people who have completed four years and got a degree. Bryan Caplan talks about this extensively.

> so now the expensively educated not too bright end up populating the internet with pithy comments but have trouble doing anything real. There are lots of hungrier, cheaper and less entitled folks elsewhere to do what they are capable of.

+1

+ 2, but I contend that "pithy" implies too much wit. I would opt for "snarky."

It's probably more than 5-10%. The health-related majors, business, and the STEM fields should teach useful skills, though many of the graduates will end up working in unrelated jobs.

See this chart of the fraction of college degrees awarded by major, over time:

http://www.npr.org/sections/money/2014/05/09/310114739/whats-your-major-four-decades-of-college-degrees-in-1-graph

Business is among the fluffiest majors out there. Not sure how it made your list. STEM encompasses a huge variety of majors from the esoteric to the practically vocational.

By far the most common useful skill improved in college is written communication.

What component of 'business' do you fancy is 'fluffy'? Accounting, finance, actuarial science, computer applications?

There are more than 350,000 business major graduates per year, the largest of any field. What percentage do you fancy understand even the rudiments of actuarial science or accounting?

Perhaps a majority can put together a pivot chart. What rigor!

Actuaries are mathematicians, not entry level office workers like the vast majority of general business graduates.

I don't know about the entire programs, but I took three business courses by correspondence: international business, management accounting and marketing. They were not very difficult, but definitely not fluff.

Learning ways to communicate complex information in simple charts is not fluff.

In the midwest, business grads from State U are coveted and generally only the top 10% or so make it in, and many don't make it out. Accounting, Finance, Marketing, Management, Information Systems, Logistics, etc... these are all important for a business of any size.

I got a liberal education from Fancy U myself, but that was 30 years ago when it only cost $60K total. At today's prices, it's an unaffordable extravagance. And most people aren't intellectuals anyway.

@Art Deco: "What component of ‘business’ do you fancy is ‘fluffy’?"

Chiefly, the bachelor's in Business Administration. In my experience, the major is 2/3-3/4 lower-division courses teaching what amounts to "how to act like an adult" with a smattering of basic math and perhaps some rudimentary accounting. It's essentially a gentleman's General Studies degree and, in the job market, the functional equivalent of a high school diploma decades ago. From a hiring perspective, it tells me a candidate possessing it can be trusted to answer the phone, conduct basic communications with clients/customers, add and subtract, and generally behave. As a signal of critical thinking ability? Or intellectual rigor? Management potential? Not so much.

Other business majors that qualify as fluffy include niche, boutique programs (e.g. "fashion marketing") that ostensibly credential knowledge which is more credibly acquired through internships and entry-level employment in the relevant fields. They're the business equivalent of "grievance studies" majors in the humanities. To be fair, though, these seem to be offered mostly by for-profit diploma mills of the sort that advertise on late-night cable and UHF stations, not by proper universities.

That said, the more specialized business majors, such as those you identify, are more rigorous, indicative of ability, and credible in conveying knowledge that's actually worth something.

It costs money to educate people, and while they are being educated they can't work as much as they otherwise could.

Why is there so much concern on this site for education leading to high-paying jobs? In any society aren't there going to be jobs that require less education than others, that are easier to find employees to fill and that are consequently less financially rewarding? In reality, why should a degreed university employee that sits in front of a computer all day, performing bureaucratic functions, be paid more than the janitor down the hall? Is knowing how to operate a keyboard more difficult and harder to learn than buffing a floor? And, if an individual knows something productive that others do not, why, except in his own financial self-interest, would he want that knowledge disseminated?

See also http://www.demos.org/blog/12/2/15/why-education-does-not-fix-poverty

Does this change your recent assessment that the G.I. Bill "may have helped lower assortative mating, because it gave opportunities for upward mobility to economic classes that had not enjoyed it"?

Then and now are dramatically different. On the bell curve of whatever measure of intelligence or capability you want, what percentage of say the upper quintile got an education in 1938?

The GI bill gave the opportunity for those people to maximize their potential that didn't exist before. Since then through policy and societal expectations most of that upper quintile get a higher education. The low hanging fruit has been picked, and any increase in numbers of educated will include less capable people.

The data is from the 1960s, not now. I don't know for sure but would suspect that postwar Italy had a lot of low hanging fruit of the type you describe.

How can I feel superior if everyone one else is educated as well.

No, we need to deny people with equal abilities equal opportunities for education.

Didn't you ever watch Downton Abbey?

You went to a better college?

If education is a credential race, it's going to hurt the poor the hardest.

Bill, would you support making educational history a protected class for employment for most jobs? That would stop the who want to "feel superior" from actually using that information to deny employment.

It already is.

Would you support it being enforced, instead of being universally ignored?

Dan, tell your kids. Not to get an education

That wasn't my question. I think you know the thrust of my question since, obviously, I shouldn't have my kids get off the credential ride until it comes to a full and complete stop.

This is the whole problem with a credential race.

Of course, my kids can deal with it pretty well; it's the bottom 50% of kids who get pushed into a college they can't complete in order to fail to get the work certificate that employers will use to discriminate against them that will suffer the most. Who cares, though, right?

It's a pretty bad argument in response to the credentialing model which asserts that education is mostly credentialing and positional goods. Bill is demonstrating mood affiliation rather well. The idea that's a powerful industry is perpetuating a zero-sum system of obstacles to attain gainful employment should be right up his alley. Unfortunately the education industry is a member of the leftist coalition and is so above reproach.

This is anecdotal but I remember reading Umberto Eco's "How to write a thesis" from the 70's. I remember a paragraph where he says that even if you get a lowly government job in some municipality with your university title, it's still good that you know how to do correct scientific research and quantitative analysis. I got the feeling that it was easy then to get a lowly government job with any kind of university degree. - But my memory may deceive me! - https://www.goodreads.com/book/show/23461426-how-to-write-a-thesis

That the author describes the results as "surprising" worries me.

I said earlier, with respect to the declining middle class, that the Democrats' position was "get a college loan, and call me in the morning."

This is why I don't believe that is a real solution. At some level they might know it too. "College for all" is a wing and a prayer that we can beat globalization by all becoming high value workers. Good work if you can get it.

(We do need better education to capture every global job we can, but we might lack non-college tracks at this point.)

I think the Germans do quite well in providing non-academic tracks for those whose skills lie in less academic areas. Namely, the apprentice programs.

They do great. At the same time, it's ready to imagine an opposition to similar programs in the US and the arguments they'd make.

Education is the biggest thing in life; if we wish to get success then we must attempt to expand to highest possible level of education. I am a Forex trader; it is also a sort of business where we are required to learn. I get plenty of help with OctaFX broker, as they got educational guides available, so with that and also with their several demo contests, it really makes trading so much easier for me and allows me to get success.

Perhaps productivity did not increase correspondingly.

I usually just read, but this is something I really ought to comment on because I actually know a good deal about it. I’ve been in Italy for forty years, run a company of my own and hire people to work there.
There is a very good reason people like me require university degrees from job prospects even though we know perfectly well they don’t imply much in terms of a skills set. The first and best is that it greatly lowers the number of candidates we have to deal with. Another reason is that most likely these candidates can read and possibly even write. Another is that I know they can “stick it” and get though a complex process like acquiring an Italian university degree.
It ought also to be said that while Italian universities are often as bad as the other comments have suggested, the outcome varies greatly according to the subject studied. Italian engineer for example are quite good, as are graduates in “substantive” things like food science. Where they fall to abysmal levels is in things designed to absorb the mass of students: subjects like sociology, political science and psychology. I have nothing to say about “film studies”.
Some years ago I had occasion to look at the files of a number of people I had hired - in that case eight. It turned out - absolutely unplanned - that of these, seven were philosophy graduates and the eighth had a degree in medieval history. I realized that unintentionally I had been looking for people with a decent cultural level who knew how to read and write, knew how to do documentary research, had some knowledge of foreign languages and, more generally, had an idea of what fork to use - figuratively - at the table. Most worked out very well. Above all, Italians who have worked outside of Italy turn out to be almost miraculously able because they tend to combine the best of two different worlds - Anglo-Saxon rationalism and Italian people skills.
The piece of research this chain of comments springs from is highly plausible but, as is so often the case, must generalize about a case where what actually matter are the single outcomes.

Best, J.

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