Category: Education
Charles Murray on the role of economic forces
This has been debated by Brooks, Krugman, and around the blogosphere, so let us hear from the man himself:
“OK, let’s try this,” he said. “If you get a rising economy, for example, if Barack Obama could say we are going to bring on seven years of incredibly low unemployment, then he would argue that this would do a lot of good to the working class, wouldn’t he?” I agree. “But we already had that in the 1990s, and yet the dropout from the labour force continued to go up, people on social disability went up. Divorce went up. We have no evidence that a robust economy has much to do with these problems at all.”
I point out that many employers complain of a shortage of skills – a large chunk of America’s workforce is not as well equipped as it used to be relative to the rest of the world. If you don’t have the skills to make a living, how can you feel pride in your situation? “Well, that’s a different problem,” says Murray, looking suddenly uninterested. “If you are arguing that 22-year-old men are saying to their girlfriends, ‘I just need a job and then I’ll behave responsibly …’ Well, that’s just bullshit. If you ask women in working class communities, they will say, ‘Why should I marry these losers? It’s like taking another child into the household.’ ”
That is from his FT interview, I am not sure if it is gated for you. The closing paragraph is this:
I feel mildly guilty at having spoiled Murray’s jovial mood but he quickly bounces back. The bill arrives. I disguise my shock at its size. As we get up to leave, Murray says: “Here is an interesting commentary: I was willing to talk to the Financial Times under the influence of alcohol but I’m not willing to play poker under the influence. What does that say?” Don’t worry, I reply, you won’t lose your shirt. Murray laughs. As we are shaking hands, he adds, “I really enjoyed that. We must do it again some time.” Then he strides off in what looks to me like a straight line.
Sentences to ponder
There are all kinds of detailed facts to extract: like that the average fraction of keys I type that are backspaces has consistently been about 7% (I had no idea it was so high!).
That is from Stephan Wolfram, and it is only the beginning. Here is his on-phone probability:
The entire post is interesting. There are these words too:
And as I think about it all, I suppose my greatest regret is that I did not start collecting more data earlier.
For the pointer I thank Brandon Robison.
Apprenticeships v. College
In my post, College has been oversold, I discussed the 40% college dropout rate. In a piece in this week’s Chronicle of Higher Education, Tuning in to the Dropping Out, I reprise some of this material but also discuss high school dropouts and the importance of alternative education paths.
In the 21st century, an astounding 25 percent of American men do not graduate from high school. A big part of the problem is that the United States has paved a single road to knowledge, the road through the classroom. “Sit down, stay quiet, and absorb. Do this for 12 to 16 years,” we tell the students, “and all will be well.” Lots of students, however, crash before they reach the end of the road. Who can blame them? Sit-down learning is not for everyone, perhaps not even for most people. There are many roads to an education.
Consider those offered in Europe. In Germany, 97 percent of students graduate from high school, but only a third of these students go on to college. In the United States, we graduate fewer students from high school, but nearly two-thirds of those we graduate go to college. So are German students poorly educated? Not at all.
Instead of college, German students enter training and apprenticeship programs—many of which begin during high school. By the time they finish, they have had a far better practical education than most American students—equivalent to an American technical degree—and, as a result, they have an easier time entering the work force. Similarly, in Austria, Denmark, Finland, the Netherlands, Norway, and Switzerland, between 40 to 70 percent of students opt for an educational program that combines classroom and workplace learning.
…In the United States, “vocational” programs are often thought of as programs for at-risk students, but that’s because they are taught in high schools with little connection to real workplaces. European programs are typically rigorous because the training is paid for by employers who consider apprentices an important part of their current and future work force. Apprentices are therefore given high-skill technical training that combines theory with practice—and the students are paid! Moreover, instead of isolating teenagers in their own counterculture, apprentice programs introduce teenagers to the adult world and the skills, attitudes, and practices that make for a successful career.
For more see Launching the Innovation Renaissance and–showing the opportunity for consensus on this topic–a recent post on apprenticeships from the Shanker blog.
Did Oprah steal book sales with her reading club?
There is a new paper (pdf) from the excellent Craig Garthwaite, here is the abstract:
This paper studies the economic effects of endorsements. In the publishing sector, endorsements from the Oprah Winfrey Book Club are found to be a business stealing form of advertising that raises title level sales without increasing the market size. The endorsements decrease aggregate adult fiction sales; likely as a result of the endorsed books being more difficult than those that otherwise would have been purchased. Economically meaningful sales increases are also found for non-endorsed titles by endorsed authors. These spillover demand estimates demonstrate a broad range of benefits from advertising for firms operating in a multiproduct brand setting.
What are the best sources on how to be a good teacher?
Charlie Clarke, a Finance PhD student at UConn, and a loyal MR reader, writes to me:
Hi Tyler,
I’m a grad student teaching for the first time, and I was wondering if you had any recommendations for a book relaying evidence based advice for teaching methods. I know Cowen’s law, “There is a literature on everything.” Just hoping there is a good book or two synthesizing that literature so that I can use it to improve my teaching.
Love the blog.
The most important lesson is to use the right textbook. Beyond that:
1. Give a damn.
2. Get to the point when you speak.
3. Expect something from them.
4. Teach to the students who are interested in learning.
5. At all levels, do not overestimate the attention span of your audience.
6. Do not be afraid to be idiosyncratic, provided you adhere strictly to #2.
Those are my tips. But to be honest, I do not consider them RCT-tested and I am not sure they maximize social welfare. They instead start from the premise that the key question is what kind of person do I want to be, and then the method asks the students to conform to that vision. Some or all of them might prove RCT-neutral, or worse. Nonetheless, the approach is a good way to motivate me and that is part of the problem.
Doesn’t Bryan Caplan have a post on this? Here is John Baez on how to teach. Peoples, what can you recommend from the literature?
Why is there a shortage of talent in IT sectors and the like?
There have been some good posts on this lately, for instance asking why the wage simply doesn’t clear the market, why don’t firms train more workers, and so on (my apologies as I have lost track of those posts, so no links). The excellent Isaac Sorkin emails me with a link to this paper, Superstars and Mediocrities: Market Failures in the Discovery of Talent (pdf), by Marko Terviö, here is the abstract:
A basic problem facing most labor markets is that workers can neither commit to long-term wage contracts nor can they self fi nance the costs of production. I study the effects of these imperfections when talent is industry-specifi c, it can only be revealed on the job, and once learned becomes public information. I show that fi rms bid excessively for the pool of incumbent workers at the expense of trying out new talent. The workforce is then plagued with an unfavorable selection of individuals: there are too many mediocre workers, whose talent is not high enough to justify them crowding out novice workers with lower expected talent but with more upside potential. The result is an inefficiently low level of output coupled with higher wages for known high talents. This problem is most severe where information about talent is initially very imprecise and the complementary costs of production are high. I argue that high incomes in professions such as entertainment, management, and entrepreneurship, may be explained by the nature of the talent revelation process, rather than by an underlying scarcity of talent.
This result relates also to J.C.’s query about talent sorting, the signaling model of education, CEO pay, and many other results under recent discussion. If it matters to you, this paper was published in the Review of Economic Studies. I’m not sure that a theorist would consider this a “theory paper” but to me it is, and it is one of the most interesting theory papers I have seen in years.
Political markets in everything
Forgive the music at the link, from Lucknow:
Your vote would not only change the fate of Uttar Pradesh, but it could also fetch extra marks for your child. In a unique first, many schools in the city have decided to award extra marks to students whose parents will cast vote in the assembly election.
And there is this:
The incentive would not be limited to exams alone, it would also find a mention in the character certificate of a student. Mishra suggested that a column for marking whether or not the child successfully convinced his/her parents to vote and hence displayed a sense of civic consciousness will be added in the report card. In case of a student is of 18 years then the relevant entry will be a mark on his/her own performance on the election day.
For the pointer I thank Sharath Rao.
The economics of higher non-profit and for-profit education
Here is a 2009 paper of mine with Sam Papenfuss (pdf), a later version of which was published in this book edited by Joshua Hall. The paper deliberately sidesteps the recent scandals and focuses on fundamentalist explanations of why higher education might be provided on a non-profit or for-profit basis.
The key stylized facts are this:
Two primary features characterize the observed educational for-profits. First, for-profits tend to specialize in highly practical or vocational forms of training. For-profits are especially prominent in areas where student performance can be measured by a relatively objective, standardized test. Nonprofits, in contrast, have a stronger presence in the liberal arts, although they are by no means restricted to that arena..
This is a general pattern, and not unique to the United States today:
A comparison of for-profit and non-profit institutions in the Philippines [in the 1970s] bears out many of the differences noted above. Filipino for-profits tend to charge lower fees, specialize in education of lower academic reputation, spend less on capital equipment, and serve students who plan on pursuing vocational careers or taking a standardized vocational test upon graduation…Students at for-profits are approximately ten times more likely to take the tests. Adjusting for the lower pass rate from for-profits, the for-profits are putting about five times the number of students through the tests as the non-profits, even though for-profits educated no more than three-fifths of all Filipino students at the time.
Here is one possible (partial) resolution:
Faculty governance implies that for-profits and nonprofits place different relative weight on reputation and profits. The for-profit selects students and faculty on the basis of how easily their reputational benefits can be captured by shareholders, whereas the non-profit places greater weight on the reputational benefits that are kept by faculty. The for-profit pursues “reputation as valued by students in dollar terms” and the nonprofit pursues “reputation with the external world,” or “reputation as a public good.” In the resulting equilibrium, for-profits achieve lower status.
…The hypothesis therefore predicts a segmented market for higher education. Students who seek the highest levels of certification and reputation will attend non-profit institutions, which are run by faculty and use their prestige to raise donations. Students whose quality can be certified by an outside vocational exam do not need the non-profit reputational endorsement. They will pursue the more efficient instruction offered by for-profits.
There is a good recent paper by David Deming, Claudia Goldin, and Lawrence F. Katz on educational for-profits, available here. Here is a 2010 Dick Vedder piece on for-profits, more positive than most recent accounts.
The very best coverage of the new Charles Murray book
Could it be the lengthy NYT profile of Stevenson and Wolfers? Other than finding material on economists interesting per se, and knowing them a bit, I found this profile relevant for two reasons. First, successful economists really can earn a good amount these days, and at relatively young ages. They could probably earn much more, if that is what they set out to do. Second, there really is a cognitive elite engaged in assortative mating, and the children of those couples will have a big head start. Furthermore that cognitive elite is now global (Justin is from Australia). No, Murray’s econometrics do not demonstrate all of his conclusions, but nonetheless this family is a walking embodiment of The Bell Curve, not to mention the new book. (I would have preferred a piece which explored this irony with more depth.) Some of you are negative in the comments on my post, but the facts about the Wolfers/Stevenson family are hardly exceptional, conditional on a few other variables but of course strongly conditional on those variables. They own a Noguchi table, we own a Noguchi lamp (cheaper than you think, by the way). They ban sugar, we do not, but there is no junk food, sugary or otherwise, kept around our house. My professional writing rails against junk food. I was disappointed that their nanny has only a Master’s degree. The nanny in our family has a Ph.d and is a well-known economics blogger.; going back in time, the two other nannies were a professional linguist and translator and an engineer (they are sometimes called “the grandparents”). Get the picture? The rhetoric in the profile is oddly non-self-conscious, perhaps in a way that makes the couple look less charismatic than they really are, and that too is worth thinking about. Parts of the profile felt like a bit of a slog to me (despite my interest in the topic), but I suspect not to most NYT readers, and of course we are seeing a highly skilled and experienced journalist at work along with a first-rate team of editors.
Always try to give things the more subtle reading.
From Facebook
“XXXX is becoming more and more convinced that Tyler Cowen and Alex Tabarrok‘s textbook is the big news in the field of economics education. Hope to use it for my class soon, wish I had it when I was a student.”
The second editions are now out, Micro, Macro, and a consolidated book, more information here.
Email from Bruce Caldwell
The Center for the History of Political Economy at Duke University will be hosting another Summer Institute on the History of Economics this June. The program is designed primarily for students in graduate programs in economics. Students will be competitively selected and successful applicants will receive a $2000 stipend for attending, plus free housing and reading materials. Our line-up of speakers is, I think you will agree, impressive. The deadline for applying is March 2. More information on the Summer Institute is available at our website, http://hope.econ.duke.edu/summer2012
Failing versus Forgetting
Bryan Caplan has a very good post on the human capital and signalling models of education. The key point is this, under the human capital model someone who forgets knowledge is no better than someone who failed to learn the same knowledge. Under the signaling model, however, failing and forgetting are very different. Bryan illustrates:
If I’d failed Spanish, I couldn’t have gone to a good college, wouldn’t have gotten into Princeton’s Ph.D. program, and probably wouldn’t be a professor. But since I’ve merely forgotten my Spanish, I’m sitting in my professorial office, loving life.
Falling (rising) incomes and personal irresponsibility, on recent Charles Murray debates
Let’s turn the mike over to Alex, our Alex, the Alex, etc., the one who writes for MarginalRevolution:
The rags to riches to rags story of a poor, unemployed fellow who wins the lottery, blows the cash, and ends up just as poor and unemployed as he began is a common trope. (Here is a classic in the genre). In a paper just published in the Review of Economics and Statistics (gated, free version here), Hankins, Hoekstra and Skiba argue that the rags to riches to rags story has a systematic component.
The authors link records of lottery winners to bankruptcy records. The use of the lottery is a great randomization device, although obviously it restricts the sample to people who play the lottery.
The central finding is this: people who win large amounts are just as likely to end up bankrupt as people who win small amounts…
Here is more, hat tip goes to Slocum.
Addendum: Floccina writes in the comments: “Former professional athletes are also an interesting case.” Are the economic variables really driving the dysfunctional social norms, or vice versa, or most likely quite a bit of both?
*The Start-Up of You*
That is the new book by Ben Casnocha and Reid Hoffman and the subtitle is Adapt to the Future, Invest in Yourself, and Transform Your Career. if you are starting a career, it is an excellent book for thinking through the practical issues you will face in branding yourself in what is becoming a more volatile and very different labor market. The book’s home page is here.
The Three Laws of Future Employment
Writing at New Geography Daniel Jelski offers a critique of (some of) Launching the Innovation Renaissance. We are in basic agreement about the laws of future employment:
Law #1: People will get jobs doing things that computers can’t do. Law #2: A global market place will result in lower pay and fewer opportunities for many careers. (But also in cheaper and better products and a higher standard of living for American consumers.) Law #3: Professional people will more likely be freelancers and less likely to have a steady job.
[But]…Laws #1 & 2 predict that there will likely be fewer STEM jobs in the future – they are both easily computerized and tradable. People will always be employed in STEM disciplines, many of them highly paid, but they’ll be paid for smarts rather than education. The disciplines will be much more competitive, with older and less talented workers left on the sidelines. Tom Friedman and Alex Tabarrok, reflecting conventional wisdom, are mistaken in maintaining that increasing STEM education is a key to future economic competitiveness.
Jelski instead recommends English lit and psychology, at least if you are young and hot! The logic–computers don’t write well and people don’t want to have sex with or be counseled by computers (yet!),–seems strong but wage rates and unemployment levels don’t support the argument. Jelski is correct about demand but forgets to take into account supply. Thus, the way to go is to be a hot engineer who can write well and get along with other people. (Jelski also forgets that my argument for STEM was in large part about the spillover effects).
I am in strong agreement with Jelski, however, that education is only the first step to success. Education is a tool; to truly succeed one must have skills developed with grit and applied with passion.