Monthly Archives: March 2013

A Higher Education Data Point

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From Dean Baker.

My colleague John Schmitt and former colleague Heather Boushey looked at this issue a couple of years ago. They noted that there was a far larger dispersion in the wages of men with college degrees than was the case with women. In fact, there was a substantial overlap between the distribution of wages of men without college degrees and men with college degrees.

The ev-psych story is that men tend to have wider variance in general. They dominate both the best jobs and the worst jobs. College may not affect this.

Pointer from Mark Thoma.

Passover 2013 Edition

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Random thoughts:

1. Passover is the original oppressor-oppressed narrative.

2. Sheryl Sandberg is much in the news with her book arguing that women ought to be more willing to choose to be ambitious and men ought to be more accomodating toward ambitious women. Here is her Ted talk. My takes:

a. I think a lot of the pushback that she gets in fact reinforces one of her points, which is that leadership qualities that are admired in men are resented in women.

b. The main pushback I would give is that I do not think that our goal should be to raise some women’s ambition up the level of that of the most-ambitious men. I think that hyper-ambitious males are a problem. They are a problem in finance, where they take excessive risks with other people’s money. They are a problem in government, where they exercise too much power. I think that ambition requires checks and balances. The market works imperfectly as a check on the ambition of executives. I think that institutional structures and social norms can provide a check on the ambition of politicians, and I regret that in our country both the structures and the norms have deteriorated considerably from that perspective.

c. I think that Sandberg’s thesis would provide a good discussion topic for a seder.

3. On April 3, Russ Roberts and Jared Bernstein will participate in a debate on whether or not to abolish the minimum wage. Tickets are $40. I am not sure what the audience expects at that price, and I expect that the price will affect the outcome. If you pay that much to get in, how can you not feel guilty voting to abolish the minimum wage? Especially so soon after Passover? My thoughts are:

a. The optimum minimum wage is probably closer to 0 than to $22 an hour, which is where Elizabeth Warren claims it might be.

b. The minimum wage issue is high on symbolism and low on substance. Few workers earn the minimum wage. As a practical matter, most workers’ reservation wage is much, much higher, as is demonstrated by the existence of unemployment. And most of the friction in the labor market comes from other factors, such as the payroll tax and employer-provided health insurance.

Shoplifting and Illegal Immigration

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Quote from a Canadian:

Illegal immigrants are to immigration what shoplifters are to shopping.

Let me continue with the analogy. We have a store that makes the process of dealing with the sales clerks very complicated, with people having to stand in line at the cash register for years. Maybe we would not have so much shoplifting if we fixed the checkout process–or at least if we offered an “express lane” to people willing to pay a fee of $5,000 or so.

Institutions of Lower Learning

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At Reason Magazine, Nick Gillespie voices a reactionary point of view.

What actually sets institutions of higher learning apart from high schools, barbers’ colleges, online academies, and various universities-in-name-only is that they are centers of knowledge production. That is, they revolve around faculty scholars who are actively expanding, revising, and remaking the received wisdom in their given fields. Active researchers, whether in astronomy or zoology or cultural studies or good old American literature, are the folks that make college worth a damn.

This is part of a symposium on higher education, which includes several other contributors. I think Gillespie touches on an important point: not all colleges are the same. If you drop from the 100th most prestigious school down to the 300th, somewhere along the way you will have hit the level where one must shed one’s idealistic illusions about “higher learning.”

How should we term these non-elite schools? Perhaps we should call them institutions of lower learning. At many of these, you will find a handful of highly capable students. But they are diamonds in the rough.

The cost of attending institutions of higher learning has increased, but I do not think that is where the crisis lies. Students at those schools tend to get what their parents are looking for, which is confirmation of their membership in the upper strata of society.

My guess is that the real crisis is at the institutions of lower learning. Cost have gone up there as well, and so have the hopes of progressives for results. But they are not wildly successful, to say the least.

By Richard Vedder’s count, close to half of college graduates, including over 100,000 janitors, hold jobs that do not require a college degree. This makes perfect sense, given that more students attend institutions of lower learning than institutions of higher learning. Vedder says that the default rate on student loans is 12 percent. I would bet that at least 2/3 of those defaults come from institutions of lower learning.

That is not to say that institutions of lower learning are bad. It is possible that they teach more effectively than the elite schools, with the latter simply enjoying the halo effect created by being able to reject anyone who is not sufficiently prepared and motivated.

Lisa Snell points out that many students enter college requiring remedial education. For the most part, these students get sifted into the institutions of lower learning.

I do not see the majority of students at institutions of lower learning becoming affluent professionals or articulate intellectuals. In that regard, I think that the potential for online courses taught by elite university professors to penetrate the institutions of lower learning is rather low.

Pundits and policy makers tend to ignore the reality at the institutions of lower learning. They need to give it more consideration.

Libertarian or Conservative?

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A reader pointed me to the home page for this year’s Freedom Fest, presumably a libertarian event. It features a 2-minute video with the theme that we are like the Roman empire, in its state of decline. The reader sees this video as

completely based on the civilization-barbarism axis.

My reaction:

1. Although the video does pay some lip service to freedom issues, I tend to agree with the reader. It seems to me that the video itself would appeal more to conservatives than to libertarians. My guess is that libertarians will not be totally turned off by the video, but they may not be attracted by it, either.

2. There is some irony in talking negatively about Roman debauchery in advertising a conference that is held annually in Las Vegas.

3. The conference agenda is rather heavily weighted toward investment strategy. Only a couple of the currently-listed speakers have topics that pertain to libertarian theory or practice.

4. Perhaps these ambiguities are a good thing. The conference may attract a mix of libertarians and conservatives, wealthy right-wingers, financial advisers, and academics.

5. I do not like large conferences at all, but perhaps that means I should force myself to go to some of them. But not in Las Vegas, which is one of my least favorite cities.

Asymmetrical Surveillance

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Bruce Schneier writes,

welcome to a world where all of this, and everything else that you do or is done on a computer, is saved, correlated, studied, passed around from company to company without your knowledge or consent; and where the government accesses it at will without a warrant.

I was strongly influenced by David Brin’s The Transparent Society, which envisioned a world where surveillance is symmetric: you can be watched by corporations and government, but in turn you can watch them. The current state, as described by Schneier, is asymmetrical.

My own view is that we need a new set of checks and balances for the 21st century. I articulated this about ten years ago in The Constitution of Surveillance. Comments on that essay would be welcome. However, please compare my proposals to the status quo or to alternative proposals, not to nirvana.

Angus Burgin on The Great Persuasion

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Interviewed by Russ Roberts, Burgin says,

if you argue that you have an abstract logic that’s universally true, that you can derive wholly from thoughts within your head, if other people don’t believe that they share that logic, you are going to have an enormously difficult time convincing them that you are right. And Friedman said, in contrast, what I can do, my method, is I can say: Okay, we both share the same end; we share the end of the well-being of the poor; but I think that if you examine the data, I can show you that my way of organizing society will be more successful at achieving that than your way. And whether or not one buys into how Friedman read the data, Friedman was adamant that that mode of argumentation was much more likely to get somebody to rethink the views that they already hold than a mode that proceeds based on an abstract logic alone.

And here is a quote that’s a keeper:

this representation of ideas as being scientifically based that aren’t necessarily so can happen on the right and on the left. And the one uniform thing is that it bothers colleagues on the other side of the aisle who watch it occurring.

Toward the end, Burgin contrasts the pessimistic outlook that he associates with Hayek with the optimistic outlook that he associates with Friedman. Hayek resonated in the Depression era and again after the financial crisis. Friedman resonated in better times. I am reminded of one of my favorite Scott Sumner blog posts, and my response to it.

I may have to give Burgin’s book another chance. My first impression was that I would not like the author’s framing of the subject.

Consumption contagion

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A paper by Marianne Bertrand and Adair Morse. (An earlier draft)

Have rising income and consumption at the top of income distribution since the early 1980s induced households in the lower tiers of the distribution to consume a larger share of their income? Using state-year variation in income level and consumption in the top first quintile or decile of the income distribution, we find evidence for such “trickle-down consumption.” The magnitude of effect suggests that middle income households would have saved between 2.6 and 3.2 percent more by the mid-2000s had incomes at the top grown at the same rate as median income.

I cannot wait to see the policy recommendation to tax high incomes. That is, take income away from people with a high marginal propensity to save and give it to government, which has a negative marginal propensity to save.