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I think I have stumbled upon a way to teach comparative advantage to those otherwise predisposed not to understand it, or to simply reject it because their tribal affiliations suggest they are supposed to.

The beautiful insights from the basic Ricardian setup lead one to conclude that while Wintercow is surely the least intelligent economist among his faculty at Meliora College, that our faculty is nonetheless most productive when I am on it specializing in the things that I do (work with undergrads on some very simple stuff). Why? When I am spending an hour working with a first semester student, that is one hour that I am not doing something else. But in my case, since I am a hack researcher and not very bright overall, “society” does not lose much by having me spend an hour teaching. The hard to fathom insight is that there are clearly much better teachers and communicators on my staff than me, yet it still makes sense to have me doing the teaching since my smarter and more talented colleagues are producing higher level, higher value work with the time they are not teaching.

Now, there are limits. If wintercow knows NO economics (a possibility!) then all bets are off – these insights depend crucially on relative productivity differences across occupations.

With that in mind, consider your friendly neighborhood government school. Last week we discussed the cognitive dissonance that is (incredibly) not happening when people regularly accede the problems with “our” education “system” yet nonetheless propose government interventions in all manner of other affairs. Maybe these sorts of things are discussed at the dinner table. But I am almost sure that what is not discussed at the dinner table is the academic (and other) aptitude of the people who teach our children every day. The striking fact is that the people who teach your children are simply not that bright. It is not polite to talk about intelligence in almost any setting, and I will surely be banned from dinner parties, but I speaketh what everyone merely whispers and thinks, and what the data clearly bare out.

The teachers of our children in K12 are certainly not as smart as the teachers who get them in college, with me being the obvious exception. This may be one reason why so many professors feel like their students are so underprepared fro college-level work. But it is more than this. It is not that the teachers are not as smart than college professors, but that in comparison to almost any other occupation populated by college graduates, the teachers are not cut from the same intellectual cloth.

Here is a McKinsey report documenting it. Here is a recent Quartz summary (some charts below). Here is a Business Insider piece. Couple the lower cognitive ability of education majors with the fact that the education major itself is seen as the “easiest” and you have a recipe for _____.

MATH, VERBAL AND SPATIAL APTITUDE

 

combined

Nice to see how highly our security personnel rank as well as our public administration personnel. Of course, maybe this masks underlying variance in aptitude in these majors, with possibly lots of brilliant folks mixed in with lots of underperforming folks – I’d like to see that data, but assume that is not the case for now.

If I were to ask people a question, “how would you feel about having your precious, special, amazing child spending fourteen thousand direct hours and thousands more indirect with people who take the easiest college majors and have the lowest average SAT scores among college majors and who have instituted ironclad workplace protections for themselves and who have helped with the passage of laws which stifle competition for their services, prevent evaluation of their work based on any measure of objective performance metrics, who hold it as gospel truth that they are the most underappreciated professionals in the workplace, etc.?” I suspect that if it were not obvious we were talking about our amazing, inspirational, awesome, underappreciated teachers people would be revulsed. Fourtheen thousand hours. Remember we are told that it takes 10,000 hours of something to achieve mastery. I would also suggest that our children are not just learning math and reading from folks that are not quite as competent as other folks who could be teaching it, but that our children are getting spoonfed a lot of ideological nonsense from folks who do not have the critical thinking ability to recognize that they are doing so. Do you believe that when your child is learning about global warming that they are led to appreciate just how complex the problem is, that the modeling is extremely difficult, and that it is not clear how serious a problem it may yet turn out to be? And so on with all of the topics they are exposed to. I know for sure my own children are not getting anything resembling critical thought and sensitivity to the complexity of our world, but maybe our school is the exception.

Now, I don’t necessarily mean to bang on teachers here, but rather the worship of government schooling. And here is why the basic lessons of economics are fun -they require a level of intellectual consistency that people are not accustomed to adhering to. Imagine the kinds of responses you might get from people when you suggest that our schoolteachers are not cut from the best intellectual cloth. You may get some people calling you elitist or rude or perhaps that other things matter for being a great teacher (more on that in another day). You may get some people arguing that this is simply ideological junk and that the data is hard to really measure (cue the global warming or macroeconomic data irony here). But you might get some people who argue something like, “Sure, there has to be SOME occupation where people have lower raw intelligence than on average, unless you think we live in Lake Wobegon.” And what this response suggests is that being below average is no indictment in itself (agreed). And what this response is also suggesting is that from an overall societal perspective, maybe it makes sense to have the current crop of Education majors doing the basic math and reading teaching to our young children, because the opportunity costs are so low. Would the world be a better place if Elon Musk or Norman Borlaug had spent their lives in a second grade classroom? I cannot say myself, but what that response redounds to is an admission that people really do understand “Ricardo’s Difficult Idea” and that not only do they understand it, that they actually celebrate it. I find asking these questions to be a more useful exercise than slapping up a few relative productivity numbers on the board and asking students to absorb it.

The takeaway for now, for me, is simply that I think our children spend far too much time being influenced by this one particular group of people. I would prefer a world (even one in the same sort of setting) where children are exposed to people and ideas from a much broader intellectual and cultural swath. I would prefer a world where we were not all so obsessed about the tests and the particulars of much of the subject matter and where our children were taught about the wonders of learning, about the limits of our knowledge, about the importance and limits of the scientific method, about the wonders and challenges of entrepreneurship, about the regular clash with error that is so vital to our lives, about trial and error and celebrating failure (learning from) as well as success, where we tried to deemphasize status competition and having all children learn the same things with the same people at the same time. In other words, while we celebrate diversification in our financial portfolios and in our government’s management of societal risks, and while we celebrate the importance of diversity in our cultural and social experiences in our adult lives, we seem not to want to engage our children in these exercises. And I find this borderline tragic. A major regret of my 41 year old life is that I did not figure out a way to structure it so that my children are not stuck in this rudderless sea and that I have not been able to provide them with the rich experience that I feel like is important for living a fulfilling and valuable life when they are older. It is very much my single most serious failing, and that is saying something.

 

  1. Score another one for the importance of peer effects (in crime). Again, where is the cognitive dissonance when it comes to neighborhood based government schooling? Question for readers: do you think if we eliminated the neighborhood restrictions on schooling that the government schools would end up less segregated (not just by race by other socio-economic and demographic characteristics)? Do you think other segmentation mechanisms would arise to keep the peer-groups as homogenous as they are today?
  2. Ethanol subsidies do not end up in pockets of consumers. Shocker. Question for micro students: what does this result imply about the shape of the supply and demand curve in the ethanol market?
  3. College subsidies do not end up in the pockets of students. Shocker. Almost all of the increase in college tuition since 1987 seems to be due to the expansion of Federal Student Loan programs. This is the second paper in the last few months to demonstrate this.

This is the blog equivalent of drunk dialing, I had promised myself not to do this.

Let’s talk this out.

There is perhaps no sector in the U.S. economy that is more comprehensively controlled by the government than schooling. I suppose you might say National Defense, but given the large amount of expenditures that are put out to contract (yes, not an ideal setup), education has it eclipsed.

Not only does the government fund the education system (which, if you ever cared to make a market failure argument in support of intervention would be the logical conclusion you would draw), rather it controls every aspect of the education system. Teachers, coaches, janitors, construction workers, bus drivers and more are all employees of the government.

Spending per student at government schools is the highest in the world and far higher than the spending per student in the (small) private sector.

Spending per student in many struggling areas (e.g. the Rochester City School District) far outpaces the spending per student in the well-performing areas nearby (e.g. the Brighton and Pittsford schools).

Teachers are unionized.

Teachers can achieve tenure and have a terrific array of workplace protections.

Teachers have to have a license.

Teachers must graduate from government accredited educational institutions.

All people are forced to pay for government schooling, via property and state taxes, irrespective of whether you go there.

Schooling is compulsory. That is right, everyone must “consume” your product.

Curricula must be approved.

State testing is required.

The activities of the schools are themselves exempt from taxes and the schools are exempt from paying property taxes.

I suppose you can go on.

Yet, it is widely “agreed” that our education system is “broken” – that not only are there gross injustices, massive inequality, deteriorating physical infrastructure and intellectual infrastructure, but that even overall “we” are underperforming relative to the navel gaze countries like Finland (more on that some other day). Almost no intervention made by the government has “worked” and if they have been successful they have been too small to scale up or have a meaningful impact on life outcomes.

I’ll make this simple. Education is government. People think the education system is awful (it may not be but I am not permitted to leave the reservation on this issue, am I?), yet there is not an iota of self-reflection about the role of government here or about the limits of government not only here but in all areas.

Nope.

None at all.

Is there anything resembling cognitive dissonance anymore when people are chanting and feeling the Bern or rallying around the Trumpster or any of the other disasters that they are getting excited about.

ASIDE, sort of: this is the exact definition of socialism – government ownership and control of the means of production. If you support government schooling, it is pretty clear that you are a socialist. I do not mean that in any way to name call or to draw analogies, it has to be quite true by definition. I do not think many people would consider themselves socialists in name. I suppose you can be a quasi-socialist and argue that you believe in government ownership of some of the means of production – I’d just like to see, therefore, a logical distinction between why it is cool in education (for you) and not somewhere else (like peaches)?

 

As I said, this post is the intellectual equivalent of drunk dialing.

For those of you who fetishize big development projects such as sports stadium subsidies as a way to promote economic growth, first recognize that no economics literature exists showing that these programs are worth it. Second, remember that far more people go to the movies each year than to sports stadiums, and there are not great big pushes to have government subsidized movie theaters. And no, don’t get any funny ideas people!

In the human capital field, Carruthers and Wanamaker write:

The gap between black and white earnings is a longstanding feature of the United States labor market.  Competing explanations attribute different weight to wage discrimination and access to human capital. Using new data on local school quality, we find that human capital played a predominant role in determining 1940 wage and occupational status gaps in the South despite the effective disenfranchisement of blacks, entrenched racial discrimination in civic life, and lack of federal employment protections.  The 1940 conditional black-white wage gap coincides with the higher end of the range of estimates from
the post-Civil Rights era.  We estimate that a truly “separate but equal” school system would have reduced wage inequality by 40 – 51 percent.

Am I permitted to even comment on this? Brave paper no doubt. Of course, this does not mean that “pre-market” discrimination and other factors do not lead to the human capital differences, in fact that is the most plausible argument. But from a labor economics perspective, and given the popular narrative today of what determines wages, I find these sorts of papers indispensable.

And in the health care field, John Cawley and co-authors write:

Analyzing transaction data from an 8-month randomized controlled field experiment involving 208 households, we find that a 10% relative price difference between nutritious and less nutritious food does not significantly affect overall purchases

Well, it is a small experiment.

Acemoglu and co-authors send a flare up to “my (former) tribe”:

We show that between 1804 and 1899, the time when the US became the world technological leader, there is a strong association
between the presence and number of post offices in a county and patenting activity, and it appears that it is the opening of postal
offices that leads to surges in patenting activity, not the other way around.  Our evidence suggests that part of the yet untold story of US technological exceptionalism is the way in which the US created an immensely capable and effective state

In other words, the US Government seems to have been a key driver of 19th century innovation. Well, patents are not the same as innovation, and there are some other institutional factors missing, but … ummm …”an immensely capable and effective state” … before you laugh, always remember to ask, “as compared to what.”

In other news, price discrimination (to coin a Klingianism) explains everything.

This paper demonstrating how tightly related ceasing smoking and obesity are, strangely, made me think about the economics of Global Warming.

I’m sure the Donald is familiar with this new result on immigration and political vote share in the US.

Coile, Milligan and Wise argue that older Americans have a significant capacity to work more in their older ages. They are ageists! Of course, these results are probably generalizeable throughout the entire population.

Another call for better governance. Instead, we will debate until we are blue in the face about the Titanic deck chair placement. Remember the Big Fact (we spend $6 TRILLION per year at all levels of government, yet, yet, yet …).

 

 

There are about one billion poor people on the Earth earning $1 per day.

No amount of “redistributive” taxation can help them or permanently alleviate their poverty.

Political freedom will help.

Economic freedom will help.

An honest government and citizenry will help.

Secure property rights will help.

The Rule of Law will help.

Where does the Big Bern stand on these issues?

The same issues affect the U.S. poor.

No amount of redistributive taxation will fix it.

No amount of “free” schooling will fix it.

No amount of “free” health care will fix it.

Real “progress” is hard.

Jord Leffrey Amherst

Here is the statement from our Board Chair. My favorite line of the entire thing: the real world is NOT a philosophy class.

From this new paper:

Lastly, having long-term care insurance has no independent effect on the probability of ending up on Medicaid

 

Perhaps this one is not surprising to regular readers, but certainly would be to laypersons:

Thus, contrary to the predictions of various efficiency wage models of employee behavior (including gift-exchange, reciprocity, and reduced shirking), as well as those of a model where effort on pro-social tasks is a normal good with a positive income elasticity, we find that unconditional increases in salaries of incumbent teachers had no meaningful positive impact on student learning

 

 

Keep Looking …

In my inbox today … I badly want to go argue for the “Pro” side:

Hi _________:

I am a librarian in the Business Division at the Central Library.   We will be hosting a debate on Thursday, February 25th from 5-7pm on the $15 minimum wage issue.  I am looking for one more person to be on the “pro” side and I was wondering if any of your economics professors agree with this and would be willing to speak.  I’ve looked through the department’s webpage and still don’t have a good sense of research interests.

Thank you in advance for your assistance!

Best,

XXXXXXXXX

Central Library of Rochester & Monroe County

Elsewhere in my inbox:

SOTU

I am reminded of this piece from Kevin Williamson. Hey Kevin, tell us what you really think! Here is the beginning:

The annual State of the Union pageant is a hideous, dispiriting, ugly, monotonous, un-American, un-republican, anti-democratic, dreary, backward, monarchical, retch-inducing, depressing, shameful, crypto-imperial display of official self-aggrandizement and piteous toadying, a black Mass during which every unholy order of teacup totalitarian and cringing courtier gathers under the towering dome of a faux-Roman temple to listen to a speech with no content given by a man with no content, to rise and to be seated as is called for by the order of worship — it is a wonder they have not started genuflecting — with one wretched representative of their number squirreled away in some well-upholstered Washington hidey-hole in order to preserve the illusion that those gathered constitute a special class of humanity without whom we could not live.

It’s the most nauseating display in American public life — and I write that as someone who has just returned from a pornographers’ convention.

Borjas strikes back in the next round of paper(s) on the impact of the Mariel Boatlift on American wages.  You would not be shocked to find that he finds that the immigrants were harmful to Floridians:

This fundamental error in data construction (wintercow: in the Round Three paper) contaminates the analysis and helps hide the true effect of the Mariel supply shock.

In other news:

  • Culturally relevant training seems to have large positive impacts on test scores, attendance and credits earned for at-risk high school students.
  • This was new information to me: it seems that Americans’ nutritional status declined considerably in the antebellum period.
  • The “kid tax” strikes again. This time, it appears that the dependent coverage mandate in Obamacare is being paid for by a reduction of wages of $1,200 by workers at firms already offering employer-based coverage, regardless of whether they have kids. Public service announcement: remember that middle class wages have stagnated for some time now. There is nothing to see here.

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