Category: Education

“Scene of the Verge of the Hay-Mead”

by  Tyler Cowen in

That is a chapter from Far From the Madding Crowd, which remains a much underrated Thomas Hardy novel.  This chapter is a masterpiece of behavioral economics, most of all on matters of courtship and romance.  It is difficult to excerpt, because it relies so much on the sequence of events and dialog.  You can read it free here.  There are other sources, including MP3s, here.

Zingales on Education Equity

by  Alex Tabarrok in

Luigi Zingales has a good op-ed on education in today’s NYTimes:

… scholars like me…work in the least competitive and most subsidized industry of all: higher education.

We criticize predatory loans by mortgage brokers, when student loans can be just as abusive. To avoid the next credit bubble and debt crisis, we need to eliminate government subsidies and link tuition financing to the incomes of college graduates…Just as subsidies for homeownership have increased the price of houses, so have education subsidies contributed to the soaring price of college.

…These subsidies also distort the credit market. Since the government guarantees student loans, lenders have no incentive to lend wisely. All the burden of making the right decision falls on the borrowers. Unfortunately, 18-year-olds aren’t particularly good at judging the profitability of an investment…

Last but not least, these subsidized loans keep afloat colleges that do not add much value for their students, preventing people from accumulating useful skills.

Instead of subsidies Zingales, drawing a page from Milton Friedman, proposes income-contingent loans.

Investors could finance students’ education with equity rather than debt. In exchange for their capital, the investors would receive a fraction of a student’s future income — or, even better, a fraction of the increase in her income that derives from college attendance. (This increase can be easily calculated as the difference between the actual income and the average income of high school graduates in the same area.)

As I wrote about earlier, Bill Clinton received a loan like this from Yale’s law school and later created a national program but it didn’t get very far (although Obama wants to expand the program). Australia, however, implemented an income contingent loan program in 1989. Australian students don’t pay anything for university when they attend but once their income reaches a certain threshold they are charged through the income tax system.  Many other countries are experimenting with income contingent loans.

Lumni is a private organization, started by economist Miguel Palacios (here is his book and Cato paper on human capital contracts), that is funding loans like this right now.

One point that Zingales doesn’t examine is adverse selection – an income-contingent loan will appeal most to people who want careers with low-income prospects, say in the non-profit sector. (Redistribution of this type was one of the reasons for the Yale law school program.) Thus, the program works best when incomes differ due to luck. My guess is that the adverse-selection problem can be handled if education venture capitalists are left free to price.

Who will be next to ask for a raise?

by  Tyler Cowen in

Angus reports:

Kudos to Thomas Sargent for landing a two year position at Seoul National University for an estimated $1,250,000 per year.

Economists can pull down 7 figures in total compensation when you figure in consulting and speech-giving on top of the academic salary, but this is the biggest salary+”research funds” number that I’m aware of in economics.

What is the correct Bayesian inference from this British message?

by  Tyler Cowen in

I found a little card in my bathroom, perched above the toilet and near the shower:

This bath has a non slip surface in part.  If you would like a rubber bath mat in addition please contact housekeeping.

And so what does that mean?  Here are some options:

1. The part without the non slip surface is really, really slippery.  Watch out!

2. We are boasting about having a non slip surface “in part,” yet without appearing to be boasting too explicitly.

3. We are not sure which is your best course of action (there is human heterogeneity), but we want to get you thinking about the non slip surface and also the slip surface.  We are sure you will put the information to good use and also we are showing our respect for your decision-making and autonomy.

4. We have attempted to word this message as emotionally neutrally as possible.  We are therefore signaling that we are a quality hotel, without intending to offer any particular advice about the non slip surface or for that matter the slip surface.  We also did not fall into the trap of hyphenating “non slip” (though we did elsewhere in the bathroom hyphenate “co-operation”), nor did we place a comma after “addition” as you barbarians might have done.

I am not intelligent enough to discern which of these might be true.

Should B. emigrate from England?

by  Tyler Cowen in

A request from a loyal blog reader. I attended a talk in Oxford by Martin Wolf from the FT a few months ago, in which he gave a very pessimistic assessment of prospects for the British and European economies. A member of the audience asked what his advice for a young graduate entering the job market would be, and his response was ’emigrate’.

So two requests, really:

(1) Do you agree?
(2) If so, where should I go?

To put things in context, I am a 21-year-old male, a final year student at Oxford University reading for a BA in Politics, Philosophy, and Economics (concentrating on the latter two subjects). I have work experience in the financial sector, moderate language ability (high school level French and German, but a fast learner), and I am willing to consider a wide range of locations. I am an EU citizen, so obviously have freedom of movement within the EU. I am open to staying somewhere for a relatively long period, but at the moment I am more inclined to think of it as a below-ten-year stay. Assume, perhaps, the prospect of permanent residence is not excluded. Feel free to edit the request as appropriate for the blog.

I say:

1. The key data point is the polarization of labor market returns, including in the United Kingdom and much of Western Europe.  Given that your background and reading habits signal smarts and hard work, you probably will do fine staying at home.

2. Switching languages will set you back by years, even if you are a quick study.  Stick to the Anglo world, or to an English-speaking job at least.

3. It is not already obvious to B. that he should move to the United States.  That’s fine, so perhaps he quite likes England already and indeed who wouldn’t?  That lack of obsession with America also means he does not have a diehard commitment to maximizing pecuniary returns and that is yet further evidence he should stay in England.

4. If you want to travel and live abroad, try to start with an English multinational and then signal a willingness to move far afield.  Or consider the foreign service.  Or work for a year or two and then do a Jodi Ettenberg for as long as you can.  All of those options sound better to me than moving to Stuttgart and trying to master the intricacies of “dass ich nicht habe lachen mussen,” (or is it “dass ich habe nicht lachen mussen”?, or do they mean different things?) while petitioning the Knigge Society for a knowledge of manners.

5. “A man who is tired of London is tired of life.”

Why were we obsessed with flying cars?

by  Tyler Cowen in

David Graeber has a fascinating albeit uneven essay about our changing visions of the future, here is one excerpt:

Why, these analysts wonder, did both the United States and the Soviet Union become so obsessed with the idea of manned space travel? It was never an efficient way to engage in scientific research. And it encouraged unrealistic ideas of what the human future would be like.

Could the answer be that both the United States and the Soviet Union had been, in the century before, societies of pioneers, one expanding across the Western frontier, the other across Siberia? Didn’t they share a commitment to the myth of a limitless, expansive future, of human colonization of vast empty spaces, that helped convince the leaders of both superpowers they had entered into a “space age” in which they were battling over control of the future itself? All sorts of myths were at play here, no doubt, but that proves nothing about the feasibility of the project.

And this bit:

The growth of administrative work [in universities] has directly resulted from introducing corporate management techniques. Invariably, these are justified as ways of increasing efficiency and introducing competition at every level. What they end up meaning in practice is that everyone winds up spending most of their time trying to sell things: grant proposals; book proposals; assessments of students’ jobs and grant applications; assessments of our colleagues; prospectuses for new interdisciplinary majors; institutes; conference workshops; universities themselves (which have now become brands to be marketed to prospective students or contributors); and so on.

As marketing overwhelms university life, it generates documents about fostering imagination and creativity that might just as well have been designed to strangle imagination and creativity in the cradle. No major new works of social theory have emerged in the United States in the last thirty years.

Interesting throughout, as they say.  For pointers I thank Umung Varma and Kevan Huston.

Cheating and Signaling

by  Alex Tabarrok in

The Chronicle of Higher Education has an article on cheating in online courses and some of the high-tech measures being used to detect such cheating:

As the students proceeded, they were told whether each answer was right or wrong.

Mr. Smith figured out that the actual number of possible questions in the test bank was pretty small. If he and his friends got together to take the test jointly, they could paste the questions they saw into the shared Google Doc, along with the right or wrong answers. The schemers would go through the test quickly, one at a time, logging their work as they went. The first student often did poorly, since he had never seen the material before…The next student did significantly better, thanks to the cheat sheet, and subsequent test-takers upped their scores even further. They took turns going first.

…”So the grades are bouncing back and forth, but we’re all guaranteed an A in the end,” Mr. Smith told me. “We’re playing the system, and we’re playing the system pretty well.”

…A method under consideration at MIT would analyze each user’s typing style to help verify identity, Mr. Agarwal told me in a recent interview. Such electronic fingerprinting could be combined with face-recognition software to ensure accuracy, he says. Since most laptops now have Webcams built in, future online students might have to smile for the camera to sign on.

Some colleges already require identity-verification techniques that seem out of a movie. They’re using products such as the Securexam Remote Proctor, which scans fingerprints and captures a 360-degree view around students, and Kryterion’s Webassessor, which lets human proctors watch students remotely on Web cameras and listen to their keystrokes.

The cheater-detector arms-race is interesting but also makes me think about the signaling theory of education. Cheating works best if the signaling model is true. If education were all about increasing productivity and if employers could measure productivity then cheating would be a waste of time. As illustrated by Mr. Smith, however, at least some students care about the A that cheating produces more than the knowledge that learning produces. Mr. Smith must believe either that education (in at least this class) doesn’t increase productivity or that employers don’t learn about productivity. Employers have big incentives to learn about productivity so my bet is on the former.

If students perceive the situation correctly we also have an interesting hypothesis: students should cheat more in those courses that offer the least productivity gains. Studies on cheating find mixed results across major, with some finding that business majors cheat more and others not, but these studies are cross sectional, i.e. across individuals. A better test of the theory that I propose would look at cheating by the same individuals across courses. Absences should also be higher in courses with lower productivity gains.

Public Choice Outreach!

by  Alex Tabarrok in

Students are invited to apply to the Public Choice Outreach Conference. The Conference is an intensive lecture series on public choice and constitutional economics that will be held at George Mason from Friday August 10 to Sunday August 12. Speakers will include Tyler Cowen, Robin Hanson, Peter Boettke, Nobelist Jim Buchanan and many others. It will be a lot of fun!

Graduate students and advanced undergraduates majoring in economics, history, international studies, law, philosophy, political science, psychology, public administration, religious studies, and sociology have attended past conferences. Applicants unfamiliar with Public Choice and students from outside of George Mason University are especially encouraged. A small stipend is available and meals and rooms will be provided by the conference (for non-locals). Space, however, is very limited.

Applications are due June 22. You can find more information here. Contact Lisa Hill-Corley if you have further questions about applications.

I, Robot?

by  Tyler Cowen in

In experiments at six public universities, students assigned randomly to statistics courses that relied heavily on “machine-guided learning” software — with reduced face time with instructors — did just as well, in less time, as their counterparts in traditional, instructor-centric versions of the courses. This largely held true regardless of the race, gender, age, enrollment status and family background of the students.

Here is more.  The report was led by William Bowen, an economist who is famous for, among other things, having described education as subject to an inexorable “cost disease” for lack of labor-saving innovation.

The Rotten Kid theorem?

by  Tyler Cowen in

According to Adecco, nearly a third of parents are helping their kids find work, and nearly one in ten are taking them to job interviews.

…Three percent of recent college grads say their parents have actually sat in with them during interviews, and one percent claim Mom or Dad wrote their thank you notes afterwards.

Nearly one in four say they would not take a job they were otherwise interested in if they could not make or receive personal phone calls at work. Twelve percent say they wouldn’t work at a place that wouldn’t let them check in on Twitter or Facebook. Finally, my favorite, five percent — one in 20 recent grads — say they wouldn’t take a job where they couldn’t shop online, and the same amount would say no to employment where they couldn’t check sports scores.

The story is here, and for the pointer I thank John Chilton.

The Myth of Chinese Meritocracy

by  Alex Tabarrok in

No doubt you have heard how the leadership of China is meritocratic and composed of technocrats with PhDs. Minxin Pei suggests that there is less than meets the eye.

…Contrary to the prevailing perception in the West (especially among business leaders), the current Chinese government is riddled with clever apparatchiks like Bo who have acquired their positions through cheating, corruption, patronage, and manipulation.

One of the most obvious signs of systemic cheating is that many Chinese officials use fake or dubiously acquired academic credentials to burnish their resumes. Because educational attainment is considered a measure of merit, officials scramble to obtain advanced degrees in order to gain an advantage in the competition for power.

The overwhelming majority of these officials end up receiving doctorates (a master’s degree won’t do anymore in this political arms race) granted through part-time programs or in the Communist Party’s training schools. Of the 250 members of provincial Communist Party standing committees, an elite group including party chiefs and governors, 60 claim to have earned PhDs.

Tellingly, only ten of them completed their doctoral studies before becoming government officials.

Simply put, Chinese institutions are not as good as those in say Mexico. Thus, China will not overtake Mexico in terms of GDP per capita any time soon, hence Chinese growth rates will fall. All we are seeing today is the logic of the Solow model in action.

Bertrand Russell’s 10 Commandments for Teachers

by  Alex Tabarrok in
  1. Do not feel absolutely certain of anything.
  2. Do not think it worth while to proceed by concealing evidence, for the evidence is sure to come to light.
  3. Never try to discourage thinking for you are sure to succeed.
  4. When you meet with opposition, even if it should be from your husband or your children, endeavour to overcome it by argument and not by authority, for a victory dependent upon authority is unreal and illusory.
  5. Have no respect for the authority of others, for there are always contrary authorities to be found.
  6. Do not use power to suppress opinions you think pernicious, for if you do the opinions will suppress you.
  7. Do not fear to be eccentric in opinion, for every opinion now accepted was once eccentric.
  8. Find more pleasure in intelligent dissent that in passive agreement, for, if you value intelligence as you should, the former implies a deeper agreement than the latter.
  9. Be scrupulously truthful, even if the truth is inconvenient, for it is more inconvenient when you try to conceal it.
  10. Do not feel envious of the happiness of those who live in a fool’s paradise, for only a fool will think that it is happiness.

Hat tip: Brainpickings.