Category: Education

Luck, Investment and the One Percent

by  Alex Tabarrok in

Jon Chait criticizes Mankiw’s defense of the 1% for focusing on productivity as a reason why the rich earn more:

Mankiw’s essay is a sprawling mess, but it hinges on a few key premises. One is that market wealth reflects a person’s productivity. Higher taxes on the rich, he writes, would take from “the most productive members” of society and give to “society’s less productive citizens,” and he uses “productive” and rich” as synonyms throughout….

But there are lots and lots of ways that a person’s income does not measure his contribution to society. Many of us see them every day. We all know people in our field who earn too much, or too little, because of social connections, or race, or gender, or luck, or willingness to cut ethical corners of one variety or another.

But later in that same article and in a followup he argues that greater productivity is an important explanation for inequality:

Krugman noted (as did I) that more affluent parents spend far more than poor children do on “enrichment expenditures” — “books, computers, high-quality child care, summer camps, private schooling, and other things that promote the capabilities of their children.” (ital added)

Mankiw’s response is that this enrichment spending is all wasted.

…Really — high-quality child care, private schools, camps — it’s all just for fun?…There is, in fact, an enormous amount of research on this very question. And the findings overwhelmingly suggest that nonschool enrichment matters an enormous amount. A huge portion of the achievement gap between poor and nonpoor children is attributable to summer vacation.

The first claim is that the wealthy aren’t more productive than the less wealthy and the latter claim is that they are more productive but that this is unfair. The two claims are in tension (perhaps a synthesis is possible but none is offered). Note also that the two claims have quite different implications. In the former case the rich are lucky and you can tax them without generating large incentive problems. In the latter case the rich have benefited from investment and taxing the benefits is likely to reduce such investment.

Addendum: Mankiw, of course, takes the opposite end of the stick, productive people but unproductive summer camps. Mankiw, however, is not inconsistent as he offers another explanation for productivity, namely earlier developed talents and capabilities possibly even genetic in origin. I don’t want to discuss that issue in this post but here is one relevant earlier post with a bit more here for those interested .

Is the labor market return to higher education finally falling?

by  Tyler Cowen in

Peter Orszag considers that possibility in his recent column.  About one in four bartenders has some kind of degree.  Orszag draws heavily on this paper by Beaudry and Green and Sand, which  postulates falling returns to skill.  It’s one of the more interesting pieces written in the last year, but note their model relies heavily on a stock/flow distinction.  They consider a world where most of the IT infrastructure already has been built, and so skilled labor has not so much more to do at the margin.  This stands in noted contrast to the common belief — which I share — that “IT-souped up smart machines” still have a long way to go and are not a mature technology.  You can’t hold that view and also buy into the Beaudry and Green and Sand story, unless you think we have suddenly jumped to a new margin where machines build machines, with little help from humans.

Rather than accepting “falling returns to skill,” I would sooner say that education doesn’t measure true skill as well as it used to.

The more likely scenario is that the variance of the return to having a college education has gone up, and indeed that is what you would expect from a world of rising income inequality.  Many people get the degree, yet without learning the skills they need for the modern workplace.  In other words, the world of work is changing faster than the world of what we teach (surprise, surprise).  The lesser trained students end up driving cabs, if they can work a GPS that is.  The lack of skill of those students also raises wage returns for those individuals who a) have the degree, b) are self-taught about the modern workplace, and c) show the personality skills that employers now know to look for.  All of a sudden those individuals face less competition and so their wages rise.  The high returns stem from blending formal education with their intangibles (there is also more pressure to get an advanced degree to show you are one of the privileged, but that is another story.)

This polarization of returns — among degree holders — explains both why incomes are rising at the top end, and why the rate of dropping out of college is rising too.  At some point along the way in the college experience, lots of students realize they won’t be able to “cross the divide,” and the degree alone won’t do it for them.  They foresee their future tending bar and act accordingly.

Too many discussions of the returns to education focus on the mean or median and neglect the variance and what is likely a recent increase in that variance.

What’s the most intellectual joke you know?

by  Tyler Cowen in

That query is from AskReddit, the link is here, and here are a few of the nominations:

It’s hard to explain puns to kleptomaniacs because they always take things literally.

And:

Jean-Paul Sartre is sitting at a French cafe, revising his draft of Being and Nothingness. He says to the waitress, “I’d like a cup of coffee, please, with no cream.” The waitress replies, “I’m sorry, Monsieur, but we’re out of cream. How about with no milk?”

And:

Werner Heisenberg, Kurt Gödel, and Noam Chomsky walk into a bar. Heisenberg turns to the other two and says, “Clearly this is a joke, but how can we figure out if it’s funny or not?” Gödel replies, “We can’t know that because we’re inside the joke.” Chomsky says, “Of course it’s funny. You’re just telling it wrong.”

I don’t find that latter one funny at all, as they are telling it wrong.

The pointer is from Jodi Ettenberg of Legal Nomads fame.

What are your picks?  You get mine every day.

Probably not good news markets in everything

by  Tyler Cowen in

For US$249 a company in the United States is promising to send curious and competitive players of computer games an unusual headset. The device, the company claims, will convert electronic gamers into electronic-gamers. At the touch of a button, the headset will send a surge of electricity through their prefrontal cortex. It promises to increase brain plasticity and make synapses fire faster, to help gamers repel more space invaders and raid more tombs. And, according to the publicity shots on the website, it comes in a choice of red or black.

The company is accepting orders, but says that it will not ship its first headsets to customers until next month. Some are unwilling to wait. Videos on the Internet already show people who have cobbled together their own version with a 9-volt battery and some electrical wire. If you are not fussy about the colour scheme, other online firms already promise to supply the components and instructions you need to make your own. Or you could rummage around in the garage.

Here is more, with further interesting points, via Michelle Dawson.

Academic economics is more winner-take-all than you might think

by  Tyler Cowen in

John P. Conley and Ali Sina Onder write (pdf):

We study the research productivity of new graduates of top Ph.D. programs in economics.  We find that class rank is as important as departmental rank as predictors of future research productivity.  For instance the best graduate from UIUC or Toronto in a given year will have roughly the same number of American Economic Review (AER) equivalent publications at year six after graduation as the number three graduate from Berkeley, U. Penn, or Yale.  We also find that research productivity of top graduates drops off very quickly with class rank at all departments.  For example, even at Harvard, the median graduate has only 0.04 AER papers at year six…

The indicating post is from Angus, thanks also to Stan T. for a pointer.

Google Interview Questions

by  Alex Tabarrok in

The famous Google interview questions? They don’t work. Here’s Laszlo Bock, senior vice president of people operations at Google:

On the hiring side, we found that brainteasers are a complete waste of time. How many golf balls can you fit into an airplane? How many gas stations in Manhattan? A complete waste of time. They don’t predict anything. They serve primarily to make the interviewer feel smart.

Instead, what works well are structured behavioral interviews, where you have a consistent rubric for how you assess people, rather than having each interviewer just make stuff up.

Behavioral interviewing also works — where you’re not giving someone a hypothetical, but you’re starting with a question like, “Give me an example of a time when you solved an analytically difficult problem.” The interesting thing about the behavioral interview is that when you ask somebody to speak to their own experience, and you drill into that, you get two kinds of information. One is you get to see how they actually interacted in a real-world situation, and the valuable “meta” information you get about the candidate is a sense of what they consider to be difficult.

Industry of Mediocrity

by  Alex Tabarrok in

AP: Washington: The nation’s teacher-training programs do not adequately prepare would-be educators for the classroom, even as they produce almost triple the number of graduates needed, according to a survey of more than 1,000 programs released Tuesday.

The National Council on Teacher Quality review is a scathing assessment of colleges’ education programs and their admission standards, training and value.

Not surprisingly the report is being criticized by the teacher’s unions who complain that evaluators “did not visit programs or interview students or schools that hired graduates.” Most of the teacher’s colleges, however, refused to cooperate with the evaluators with some even instructing their students not to cooperate. Do you think the non-cooperators were of better quality than the programs that did cooperate?

According to the report, “some 239,000 teachers are trained each year and 98,000 are hired” suggesting a poor return for the potential teachers. One wonders about the quality of the teachers not hired.

In any case, the report is consistent with a wide body of research that shows teacher quality is not high and has declined over time, see Launching the Innovation Renaissance for details.

Meanwhile, on the every cloud has a silver lining front, Neerav Kingsland, Chief Strategy Officer for the important non-profit New Schools for New Orleans argues that the great stagnation will increase the supply of high-quality teachers:

Unfortunately, international trade and technology will continue to eliminate middle-class jobs. Personally, I’m worried that our political system will not adequately ease the pain of this transition. However, this economic upheaval will increase the quality of human capital available to schools. The education sector will likely capture some of this talent surplus, so long as schools are well managed. Moreover, if tech progress reduces the amount of educators we need, we may be in a situation where we have both (a) higher quality applicant pools and (b) less education jobs. I do not view the hollowing out of middle-class jobs as a positive economic development, but it will positively affect education labor…

*Confessions of a Sociopath*

by  Tyler Cowen in

I suspect nothing in this book can be trusted.  Still, it is one of the more stimulating reads of the year, though I have to be careful not to draw serious inferences from it.  Does its possible fictionality make it easier to create so many interesting passages?:

I can seem amazingly prescient and insightful, to the point that people proclaim that no one else has ever understood them as well as I do.  But the truth is far more complex and hinges on the meaning of understanding.  In a way, I don’t understand them at all.  I can only make predictions based on the past behavior they’ve exhibited to me, the same way computers determine whether you’re a bad credit risk based on millions of data points.  I am the ultimate empiricist, and not by choice.

The author argues that sociopaths are often very smart, have a lot of natural cognitive advantages in manipulating data, and are frequently sought out as friends for their ability to appeal to others.  It is claimed that, ceteris paribus, we will stick with the sociopath buddies, as we are quite ready to use sociopaths to suit our own ends, justly or not.  It is claimed that for all of their flaws, many but not all sociopaths are capable of understanding what is in essence the contractarian case for being moral — rational self-interest — and sticking with it.  Citing some research in the area (pdf), the author speculates that sociopaths may have an “attention bottleneck,” so they do not receive the cognitive emotional and moral feedback which others do, unless they decide very consciously to focus on a potential emotion.  For sociopaths, top down processing of emotions is not automatic.

We even learn that (supposedly) sociopaths are often infovores.  It seems many but not all sociopaths are relatively conscientious, and the author of this book (supposedly) teaches Sunday school and tithes ten percent to the church.  It just so happens sociopaths sometimes think about killing or destroying other people, without feeling much in the way of remorse.

I can also recommend this book as an absorbing memoir of a law professor and also of a Mormon outlier.  It is written at a high level of intelligence, and it details how to get good legal teaching evaluations, how to please colleagues, how to evade Mormon proscriptions on sex before marriage, and it offers an interesting hypothesis as to why sociopaths tend to be more sexually flexible than the average person (hint: think more systematically about what abnormal or weakened top-down processing of emotions might mean in other spheres of life).

The author argues that sociopaths can do what two generations of econometricians have only barely managed, namely to defeat the efficient markets hypothesis and earn systematically super-normal returns.  What does it say about me that I find this the least plausible claim in the entire book?

Here is a useful New York Times review.  Here is the author’s blog, which is about being a sociopath, or about pretending to be a sociopath, or perhaps both.  Here is the book on Amazon and note how many readers hated it.  I say they just don’t like sociopaths.

One hypothesis is that this book is a stunt, designed as an experiment in one’s ability to erase or conceal an on-line identity, although I would think a major publisher (Crown) is not up for such tricks these days.   An alternative is that a sociopath — not the one portrayed in the book — is trying to frame an innocent person as the author of the book (some trackable identity clues are left), noting that the book itself discusses at length plans to destroy others for various (non-justified) reasons.  Or is it a Straussian critique of the Mormon Church for (supposedly) encouraging sociopathic-related character traits in its non-sociopath members?  Or all of the above?

You will note that the book’s opening diagnosis comes from an actual clinical psychologist in the area, and the Crown legal department would have no interest in misrepresenting him in this manner.  So the default hypothesis has to be that this book represents some version of the truth, at least as seen through the author’s eyes.

Some version of the author, wearing a blonde wig it seems, appeared on the Dr. Phil show, to the scorn of Phil I might add.

I cannot evaluate the scientific claims in this book, and would I trust the literature on sociopaths anyway, given that the author claims it is subject to the severe selection bias of having more access to the sociopathic losers and criminals?  (I buy this argument, by the way.)  It did occur to me however, that for the rehabilitation of sociopaths, whether through books or other means, perhaps they should consider…a rebranding exercise?  But wait, “Sorry, I could not find synonyms for ‘sociopath’.”

If nothing else, this book will wake you up as to how little you (probably) know about sociopaths.

I am proud of the Dotchka

by  Tyler Cowen in

Yana flew yesterday from Newark airport and will be arriving in Mumbai shortly, heading in a few days to live in Bangalore.  She will be working with Forus Health to decrease preventable blindness among India’s poor, in part by aiding with their distribution of an affordable screening device.

Her indiegogo project is here, which also describes her trip and mission.  I hope to visit later in the year.  And I expect her to come back knowing three or four more languages.

How critical are the early years of life?

by  Tyler Cowen in

“Early intervention” to benefit children is one of those sacred cows which I consider unproven and which also is cited in far too malleable a fashion.  Here is a new paper by Alan Rushton, Margaret Grant, Julia Feast, and John Simmonds, probably gated for many of you, but worth a read if you can.

The abstract is too wordy, but the study is a follow-up on one hundred Chinese girls who first lived in Chinese orphanages, were later adopted into the UK, and who now are 40 to 50 years old.  The orphanage involved deprivation and even some malnutrition (55% of sample).  There was basic medical care and supervision, although no general one-to-one caregiver relationship.

Of the initial hundred children, 98 were still alive and 72 of those responded to the survey, which also involved extensive follow-up interviews.

Most entered the orphanage very early, in the first year of life, with a mean of three months old.  Age at exit varied between eight months and 83 months, with a mean of 23 months, and with a mean of 20 months spent in the care of the orphanage.

Compared to a general sample of adopted British women, and also UK non-adopted women, the adopted Chinese women did not appear to be at greater risk of mental illness, nor did they appear to have elevated health risks.  There were no statistically significant differences when it came to “life control” or “life satisfaction.”

This single study is hardly dispositive, but it should raise some skeptical eyebrows.  Recovering from a bad start, in this data set, appears eminently possible, provided of course that the environment improves.

Addendum: Here are some observations on Gerard Debreu’s early life (jstor).

For the pointer I thank a loyal MR reader.