Have I mentioned I don't like policy elites?

I opened up my NY Times app the other morning to discover this opinion from Richard V. Reeves, fellow in Economic Studies and policy director for the Center on Children and Families at Brookings:

"Let" affluent children fail is a thinkable public policy goal?

At Brookings?

The logic shoots off in all kinds of horrifying directions. E.g.: granting for the sake of argument that letting affluent children fail is a good thing, wouldn't giving them a little push off the cliff be even better?

(And how much should we pay suburban teachers for that service?)

Uggh.

I haven't been able to bring myself to read the column, especially after spotting this line:

"It is a stubborn mathematical fact that the top fifth of the income distribution can accommodate only 20 percent of the population."

Twenty percent is 20%, so the "bottom" 80%, a supermajority of the population, is forevermore locked into the bottom 80% unless we "let" affluent children "fail."

By that reasoning, whenever a child grows up in the top 20% and then, as an adult, descends to the top 21%, that child has "failed."

I skimmed long enough to spot the term "opportunity hoarding" and to discover that it originates with Charles Tilly, with whom I think Ed and I had dinner in Los Angeles years ago. I remember liking Professor Tilly immensely, assuming our dinner companion was in fact Charles Tilly; Ed doesn't remember. On the other hand, Ed did know Tilly, so I think it was Tilly.

Anyway, on the strength of one nonverifiable memory of a fabulous evening with Charles Tilly, I have decided that if I want to know more about opportunity hoarding, and I may want to know more about opportunity hoarding, I will go directly to the source and bypass Brookings.

In the meantime, I am now sufficiently well-versed in macroeconomics to know that the answer both to twenty percent being twenty percent and opportunity hoarding is a roaring economy and a weaker dollar.

Today's factoid: our strong-dollar policy apparently originated with Robert Rubin.

Another member of the policy elite.

Education Equality Project

I left a comment on the Education Equality Project blog this morning. I didn't think to keep a copy, but the point of the post was that we need to eliminate mediocre NSF math programs if we ever hope to move this country forward in math and science education. These programs create inequities because students are not taught real math at school. It's wrong, in my opinion, to think that some students need an inferior math curriculum.

The comment appeared for a while, but then it was removed. In fact, NO comments have been keepers yet!

If you give it a try, please save it to copy as a comment here.

news flash: happiness inequality down

from the TIMES:

Despite the fact that income inequality — the chasm between rich and poor — has grown to levels rarely seen outside the third world, happiness inequality in the United States seems to have declined sharply over the past 35 years. And that is not because everyone is just that much more cheerful.

According to new research by Betsey Stevenson and Justin Wolfers of the Wharton School at the University of Pennsylvania, the happiness gap between blacks and whites has fallen by two-thirds since the early 1970s. The gender gap (women used to be happier than men) has disappeared. Most significant, the disparity in happiness within demographic groups has also shrunk: the unhappiest 25 percent of the population has gotten a lot happier. The happiest quarter is less cheerful.

It seems odd that happiness would become more egalitarian over a period in which the share of the nation’s income sucked in by the richest 1 percent of Americans rose from 7 percent to 17 percent. In fact, the report does find a growing happiness gap between Americans with higher levels of education and those with less, which is roughly in line with the widening pay gap between the skilled and unskilled.

from the author of the paper:

Two trends are pretty clear. First, average happiness is roughly unchanged since the 1970’s. And second, happiness inequality — measured here as the variance of happiness — fell pretty dramatically from 1972 until the late 1980’s; this compression has since stalled, and about one third of the total decline has subsequently been reversed.

[snip]

The good news is that the unhappy end of the distribution has become somewhat happier; the bad news is that the happy end has become less happy.

Apparently women either are or are not getting less happy as a group. Who can say?

Off the top of my head, I'm going to guess that it was more fun being rich when you could live off your interest as opposed to the 100 hours of billable time the working rich have to put in these days. When I say "have to," I mean have to, at least in the case of rich attorneys; apparently judges don't give a lot of incompletes.

NBER digest of the shorter hours paper available here.

Steve Levitt summarizes The Race in 2 sentences
Jimmy graduates

The anemic response of skill investment to skill premium growth
The declining American high school graduation rate: Evidence, sources, and consequences
Pushy parents raise more successful kids

The Race Between Education and Technology book review
The Race Between Ed & Tech: excerpt & TOC & SAT scores & public loss of confidence in the schools
The Race Between Ed & Tech: the Great Compression
the Great Compression, part 2
ED in '08: America's schools
comments on Knowledge Schools
the future
the stick kids from mud island
educated workers and technology diffusion
declining value of college degree
Goldin, Katz and fans
best article thus far: Chronicle of Higher Education on The Race
Tyler Cowan on The Race (NY Times)
happiness inequality down...
an example of lagging technology diffusion in the U.S.
the Times reviews The Race, finally
IQ, college, and 2008 election
Blooming High School & "path dependency"
the election debate that should have been

Tyler Cowan on The Race

The most commonly cited culprits for the income inequality in America — outsourcing, immigration and the gains of the super-rich — are diversions from the main issue. Instead, the problem is largely one of (a lack of) education.

[snip]

Starting about 1950, the relative returns for schooling rose, and they skyrocketed after 1980. The reason is supply and demand. For the first time in American history, the current generation is not significantly more educated than its parents. Those in need of skilled labor are bidding for a relatively stagnant supply and so must pay more.

The return for a college education, in percentage terms, is now about what it was in America’s Gilded Age in the late 19th century; this drives the current scramble to get into top colleges and universities. In contrast, from 1915 to 1950, the relative return for education fell, mostly because more new college graduates competed for a relatively few top jobs, and that kept top wages from rising too high.

Professors Goldin and Katz portray a kind of race. Improvements in technology have raised the gains for those with enough skills to handle complex jobs. The resulting inequalities are bid back down only as more people receive more education and move up the wage ladder.

Income distribution thus depends on the balance between technological progress and access to college and postgraduate study. The problem isn’t so much capitalism as it is that American lower education does not prepare enough people to receive gains from American higher education.

[snip]

It doesn’t suffice simply to increase the number of people in college; rather the new students must be prepared to learn. There is, however, no single magic bullet.

Pessimists like Charles Murray, co-author of the much-debated 1994 book “The Bell Curve,” have argued that only so many individuals are educable at a high level. If that were the case, current levels of inequality might be here to stay.

But the evidence suggests that when additional higher education becomes available, it offers returns in the range of 10 to 14 percent per year of college, at least for the first newcomers to enroll.

Nonetheless it will, sooner or later, become increasingly difficult to deliver the gains from college — not to mention postgraduate study — to the entire population. Technology is advancing faster than our ability to educate. So even if inequality declines today, it may well intensify in the future. Even if American education improves at every level, the largely not-for-profit educational sector may simply be less dynamic than the progress of new technologies.

The lesson is this: Economists are homing in on the key to the inequality problem, but don’t think any solution will necessarily last for long.

Why Is Income Inequality in America So Pronounced? Consider Education
Tyler Cowen
Published: May 17, 2007

Ultimately, this is my question: does the race never end?

Or does "skill-biased technology change" just keep going and going and going until pretty soon you have to know calculus to turn on the TV. Speaking of which, we're not too far from that point around here, I often feel. At a minimum, being able to turn on the TV in our family room and actually watch something on it requires either genius-level working memory or months of deliberate practice. The set-up alone is complicated enough, but on top of that Verizon keeps changing the channel line-up. Seeing as how the cheapest package Verizon offers gives you 6 or 7 hundred thousand different channels to choose amongst, knowing where on the number line USA Network is located today is a job for SuperMemo.

I've got to get back to ALEKS. Soon.

Anyways...assuming the education system or the business world is able to create and distribute highly effective, efficient, and advanced education to the masses (the business world appears to be trying), presumably there's still going to be a limit on how far people can go in higher education, or how far they want to go, or maybe just how many genius trainers we can recruit who are patient enough to teach vector autoregression incrementally to the rest of us, step by step, day by day, until we finally get it 10 or 20 years down the line.

Once we reach that limit, then what?


Steve Levitt summarizes The Race in 2 sentences
Jimmy graduates

The anemic response of skill investment to skill premium growth
The declining American high school graduation rate: Evidence, sources, and consequences
Pushy parents raise more successful kids

The Race Between Education and Technology book review
The Race Between Ed & Tech: excerpt & TOC & SAT scores & public loss of confidence in the schools
The Race Between Ed & Tech: the Great Compression
the Great Compression, part 2
ED in '08: America's schools
comments on Knowledge Schools
the future
the stick kids from mud island
educated workers and technology diffusion
declining value of college degree
Steve Levitt summarizes The Race in 2 sentences
Goldin, Katz and fans
best article thus far: Chronicle of Higher Education on The Race
Tyler Cowan on The Race (NY Times)
happiness inequality down...
an example of lagging technology diffusion in the U.S.
the Times reviews The Race, finally
The anemic response of skill investment to skill premium growth
The declining American high school graduation rate: Evidence, sources, and consequences
IQ, college, and 2008 election
Bloomington High School & "path dependency"
the election debate that should have been

Goldin, Katz and fans

Goldin and Katz make two largely correct diagnostic points in The Race Between Education and Technology; that the United States got a significant head start on economic development because it expanded access to secondary and post-secondary education sooner than other countries, and we are no longer ahead in that regard. Their prescription, however, is largely incorrect. We can't get ahead of other countries by increasing the number of Americans graduating from college, because nearly all of the students who can do so are already trying.

Joanne Jacobs posted on this in the context of David Brooks' NYTimes column and I left this comment there:

>>>>
If no European country in 1950 had more than 30 percent of its older teens in school, that was an inefficiency that the United States could exploit to its advantage. But if every young person who can benefit from staying in school long enough to graduate is already doing so, there’s nothing further to exploit.

We can argue about what the ideal high school graduation rate should be, that is, what the criterion for graduation should be, and what needs to be done to ensure every child who is capable of meeting the criterion has resources and opportunity to do so. But it is delusional to believe that we can have both a meaningful criterion for graduation and a 100 percent graduation rate.

I suspect the true graduation rate should be between 80 and 85 percent. Maybe we could push it to 90, subject to the law of diminishing returns, if we poured every possible dollar into the last few marginal students — though, as Heckman has demonstrated, we’d get much higher returns if we invested the money when they were little.

Something similar operates all along the line of returns to increasing education. There are non-economic returns to more education, but they don’t depend on credentials. If everyone who is capable of benefiting economically from higher education is already able to earn a degree, there is no further inefficiency for the U.S. to exploit.

If other countries have larger percentages of their populations who are capable of benefiting from more years of education than the U.S. does, well, what are we supposed to do about that?

>>>>

Brooks cites economist James Heckman in support of early intervention, but Heckman's point is not that early intervention is a panacea, but that whatever it can accomplish will be most effective if it's done early rather than late.

I haven't read the Heckman paper Brooks is citing, but Heckman has said -- very circumspectly -- that African Americans and Hispanics begin school with similar performance deficits, but that Hispanics are much more likely to make them up.

From a 2005 column I wrote:

. . .
"Our analysis of the Hispanic data illuminates the traditional study of black-white differences and casts doubt on many conventional explanations of these differences since they do not apply to Hispanics who also suffer from many of the same disadvantages."

I know this is contrary to just about everything you've heard or read, so you're asking, "Who are these people?" They're Pedro Carneiro, University College London; James J. Heckman, University of Chicago, American Bar Foundation and University College London (and winner of the 2000 Nobel Prize in economics for developing the kind of technical statistical analysis that undergirds this paper) and Dimitriy V. Masterov. The paper was written for the Institute for Labor Market Policy Evaluation, a part of the Swedish Ministry of Industry, Employment and Communications, in Uppsala, Sweden.

The paper is "Labor market discrimination and racial differences in premarket factors" (pdf file) and it's at on the Web.

Steve Sailer has written about the Brooks column. See also this post at the population genetics blog gnxp.

(For a bonus, the immediately preceding post dissects the media coverage of the math/gender study.)

The Race, and a model composition for writing instruction

The Race Between Education and Technology is getting attention, which is a relief. I was worried the book was going to drop like a stone to the bottom of the pond, because, politically speaking, it is betwixt and between. Goldin and Katz reject the liberal view that the policies of Ronald Reagan and Margaret Thatcher were and are (primarily) responsible for rising inequality, while embracing the liberal view that education lowers inequality and that nearly everyone can go to college.

This is why I think of the book as revolutionary. I'm not sure it's right to call the book paradigm-shifting, but it's close. I was blown away by the opening chapters. (I stalled midway through the book, when I veered off to read the Book of Genesis, the first 12 chapters of The Odyssey, and Guns, Germs, and Steel. Now that that's over with, I'll be going back to The Race.)

[pause]

ah-hah!

Tyler Cowan says The Race is "the most important book on modern U.S. inequality to date," so I am vindicated. I will stick with my view that The Race is....the most important book on modern U.S. inequality to date.

That works.

Thus far I've seen two solid "con" reactions, one from Arnold Kling and the other from George Leef (have yet to read Leef's closely), but for the moment, I want to post a link to a fantastically good article on The Race: Supply Side Education by David Glenn. Glenn's piece is so good it could be taught in journalism courses. Precisely because The Race is so expectation-defying, it is not an easy book to write about, and he nailed it:

In a 1996 television interview that was partly shot in an elementary-school computer lab, Laura D'Andrea Tyson, who was then chair of Bill Clinton's Council of Economic Advisers, tried to explain rising inequality in America.

"In the early 1970s," Tyson said, "a college graduate earned something like 45 percent more than a high-school graduate. Today a college graduate earns 84 percent more than a high-school graduate. What's happened is the technology has increased the demands for higher skills."

Computers did it. Among both Democrats and Republicans, that is one of the most frequently cited explanations for the post-1975 spike in American wage inequality. As the story goes, information technology has transformed almost every job, increasing employers' thirst for workers with advanced skills and college credentials. In the lingo of economists, this is "skills-biased technological change."

But that story is at best a half-truth, according to a new book by two professors of economics at Harvard University. The authors, Claudia Goldin and Lawrence F. Katz, don't deny that American employers' demand for skills has been rising. But they say that that demand has been rising at a roughly constant rate for the last century. Contrary to popular belief, they argue, the personal computer and the Internet have not caused a sharp leap in employers' demand for skill.

So if demand doesn't explain the recent rise in inequality, what does? Look to the supply side of the equation, Goldin and Katz say: America simply isn't educating its citizens the way it used to.

In The Race Between Education and Technology (Belknap/Harvard University Press), Goldin and Katz emphasize that plenty of skills-biased technological change occurred long before anyone had heard of Bill Gates. The mass introduction of electric power in the 1910s, for example, increased the complexity of many jobs and increased employers' demand for skill. [for me, their analysis of the returns to education for blue collar workers early in the century is one of the most fascinating parts of the book -- will get passages posted soon]

But that rising demand, in Goldin and Katz's account, was outpaced during most of the 20th century by a soaring supply of educated workers. Between 1915 and 1950, the national high-school-graduation rate rose from roughly 15 percent to roughly 60 percent, and college attendance also spiked. As their numbers ballooned, educated workers could no longer command so much more in wages. Between 1915 and 1950, the college wage premium (the amount by which college graduates outearn people who hold only a high-school diploma) and the high-school wage premium (the amount by which high-school graduates out-earn high-school dropouts) both fell sharply. The postwar period famously saw a broad prosperity, with wages growing for people of all educational levels.

Then, around 1970, something changed. High-school graduation rates flattened near 70 percent, where they remain. College attendance continued to grow, but the college-completion rate — that is, the percentage of a population cohort that earns a bachelor's degree — stagnated for more than a decade.

[snip]

Demonstrating that the demand for skill has been roughly constant for a century is a tall order, and it's the element of Goldin and Katz's book that is most likely to draw skepticism from their colleagues. [so far, I haven't seen this] Their argument draws partly on data from the Iowa state census, which was one of the few during the first half of the century to collect detailed statistics about educational attainment.... [Barry Garelick used data from Iowa in his analysis of traditional math education, too]

Goldin and Katz concede that institutional features — trade policies, labor laws, and so on — have also helped to shape American inequality over the last century. But as a rough cut, they say, the simple supply and demand of skilled labor — the race between education and technology — tells most of the story.

"Education has not kept pace," says Katz. "In the early 20th century, we created almost universal access to high school. We have not done the same with college, which essentially we would need to have done to have kept this sort of widespread prosperity present."

One of the book's central questions is this: Given that the wage premiums for education have grown so strongly during the last 35 years, why haven't more young people responded by earning degrees?

One answer, Goldin and Katz say, is that the short-term barriers to college are steeper than they once were. "Among the college-ready," Katz says, "we need to make sure that they have the financial support to get into college. [emphasis added] We do an OK job with that, but we could do better. More than half of undergraduates work more than 20 hours a week. The loan burdens are tremendous. Tuition has been rising. It's clear that those things are taking a toll."

A more difficult answer, Katz says, has to do with the weaknesses of American public-school education. "There are a myriad of possible reasons for that," he says. "Some people say it's all about resources. Some people say we need to improve incentives for parents and teachers. Clearly, over the long run, early-childhood intervention programs may be very important. [clearly?] We need a continuum of investments. But per dollar, we're not doing so well in the K-12 system in the U.S. these days."

In a working paper released earlier this year, three Yale University economists — Joseph G. Altonji, Prashant Bharadwaj, and Fabian Lange — suggested that the slowdown in American educational attainment and skill development might be even worse than it appears.

[snip]

Goldin and Katz, meanwhile, are continuing to develop their model and are scrutinizing the recent growth of wage inequality within the group of people who hold college degrees. "There has been much more growth of inequality among college graduates than among noncollege workers," Katz says. Only some people, he says, are coming out of college with the high-level abstract-reasoning skills that fully complement the new information technologies and command high salaries. Workers with "midlevel" skills, by contrast, are more likely to see their tasks simply replaced by computers.

Does that mean, then, that too many people are going to college, and that the rewards of a B.A. are overrated, as some commentators have recently suggested?

"That's absolutely wrong," Katz says. "The reason we know that is the following: It's true that there's growing inequality among college graduates. But there's shrinking inequality among noncollege workers. The market is very bad for people with only a high-school diploma — they're not doing much better than people who dropped out in the eighth grade. So the return [on investment] to college is still very high. Even if you wind up in the bottom half of the college group, you're still much better off than in the top half of the high-school group."

If you're at all interested in this subject, it's worth reading the whole article -- and anyone who's teaching high school or college-level composition might want to consider having students read and analyze Green's work, too. (I would pay particular attention to Green's ability to assess and speak to the reader's assumptions.)

I have to get to the city, so will knock off for now.

Will be back with thoughts on Kling, Leef, and David Brooks' column on the book later.

Steve Levitt summarizes The Race in 2 sentences
Jimmy graduates

The anemic response of skill investment to skill premium growth
The declining American high school graduation rate: Evidence, sources, and consequences
Pushy parents raise more successful kids

The Race Between Education and Technology book review
The Race Between Ed & Tech: excerpt & TOC & SAT scores & public loss of confidence in the schools
The Race Between Ed & Tech: the Great Compression
the Great Compression, part 2
ED in '08: America's schools
comments on Knowledge Schools
the future
the stick kids from mud island
educated workers and technology diffusion
declining value of college degree
Goldin, Katz and fans
best article thus far: Chronicle of Higher Education on The Race
Tyler Cowan on The Race (NY Times)
happiness inequality down...
an example of lagging technology diffusion in the U.S.
the Times reviews The Race, finally
IQ, college, and 2008 election
Bloomington High School & "path dependency"
the election debate that should have been

human capital & Two Million Minutes

We watched Two Million Minutes last night. It was a lot of fun, although I don't think it works well as piece of political or persuasive filmmaking.

After we saw it, I discovered that one of the economists interviewed -- Richard Freeman -- published a book called The Overeducated American in 1976, the point at which income inequality was lowest in the country's history, which meant that the return to a college education was also the lowest in the country's history.

Gary Becker mentions the book in his essay on human capital:

To most people capital means a bank account, a hundred shares of IBM stock, assembly lines, or steel plants in the Chicago area. These are all forms of capital in the sense that they are assets that yield income and other useful outputs over long periods of time.

But these tangible forms of capital are not the only ones. Schooling, a computer training course, expenditures of medical care, and lectures on the virtues of punctuality and honesty also are capital. That is because they raise earnings, improve health, or add to a person's good habits over much of his lifetime. Therefore, economists regard expenditures on education, training, medical care, and so on as investments in human capital. They are called human capital because people cannot be separated from their knowledge, skills, health, or values in the way they can be separated from their financial and physical assets.

Education and training are the most important investments in human capital. Many studies have shown that high school and college education in the United States greatly raise a person's income, even after netting out direct and indirect costs of schooling, and even after adjusting for the fact that people with more education tend to have higher IQs and better-educated and richer parents. Similar evidence is now available for many years from over a hundred countries with different cultures and economic systems. The earnings of more educated people are almost always well above average, although the gains are generally larger in less developed countries.

Consider the differences in average earnings between college and high school graduates in the United States during the past fifty years. Until the early sixties college graduates earned about 45 percent more than high school graduates. In the sixties this premium from college education shot up to almost 60 percent, but it fell back in the seventies to under 50 percent. The fall during the seventies led some economists and the media to worry about "overeducated Americans." Indeed, in 1976 Harvard economist Richard Freeman wrote a book titled The Overeducated American. This sharp fall in the return to investments in human capital put the concept of human capital itself into some disrepute. Among other things it caused doubt about whether education and training really do raise productivity or simply provide signals ("credentials") about talents and abilities.

But the monetary gains from a college education rose sharply again during the eighties, to the highest level in the past fifty years. Economists Kevin M. Murphy and Finis Welch have shown that the premium on getting a college education in the eighties was over 65 percent. Lawyers, accountants, engineers, and many other professionals experienced especially rapid advances in earnings. The earnings advantage of high school graduates over high school dropouts has also greatly increased. Talk about overeducated Americans has vanished, and it has been replaced by concern once more about whether the United States provides adequate quality and quantity of education and other training.

This concern is justified. Real wage rates of young high school dropouts have fallen by more than 25 percent since the early seventies, a truly remarkable decline. Whether because of school problems, family instability, or other factors, young people without a college or a full high school education are not being adequately prepared for work in modern economies.

[snip]

The enormous influence of the family would seem to imply a very close relation between the earnings, education, and occupations of parents and children. Therefore, it is rather surprising that the positive relation between the earnings of parents and children is not strong...

The old adage of "from shirtsleeves to shirtsleeves in three generations" is no myth; the earnings of grandsons and grandparents are hardly related. Apparently, the opportunities provided by a modern economy, along with extensive public support of education, enable the majority of those who come from lower-income backgrounds to do reasonably well in the labor market. The same opportunities that foster upward mobility for the poor create an equal amount of downward mobility for those higher up on the income ladder.

[snip]

New technological advances clearly are of little value to countries that have very few skilled workers who know how to use them. Economic growth closely depends on the synergies between new knowledge and human capital, which is why large increases in education and training have accompanied major advances in technological knowledge in all countries that have achieved significant economic growth.

The outstanding economic records of Japan, Taiwan, and other Asian economies in recent decades dramatically illustrate the importance of human capital to growth. Lacking natural resources—they import almost all their energy, for example—and facing discrimination against their exports by the West, these so-called Asian tigers grew rapidly by relying on a well-trained, educated, hardworking, and conscientious labor force that makes excellent use of modern technologies.

I hate to even think about people who listened to pundits back in the 70s saying a college education was a waste of time because college graduates didn't make any money. That viewpoint was everywhere.

You have to take advice about how it doesn't pay to go to Harvard with a grain of salt when it comes from people who went to Harvard.

The Race: declining value of a college degree

College-educated workers are more plentiful, more commoditized and more subject to the downsizings that used to be the purview of blue-collar workers only. What employers want from workers nowadays is more narrow, more abstract and less easily learned in college.

To be sure, the average American with a college diploma still earns about 75% more than a worker with a high-school diploma and is less likely to be unemployed. Yet while that so-called college premium is up from 40% in 1979, it is little changed from 2001, according to data compiled by Jared Bernstein of the Economic Policy Institute, a liberal Washington think tank.

Most statistics he and other economists use don't track individual workers over time, but compare annual snapshots of the work force. That said, this trend doesn't appear due to an influx of lower-paid young workers or falling starting salaries; Mr. Bernstein says when differences in age, race, marital status and place of residence are accounted for, the trend remains the same.

A variety of economic forces are at work here. Globalization and technology have altered the types of skills that earn workers a premium wage; in many cases, those skills aren't learned in college classrooms. And compared with previous generations, today's college graduates are far more likely to be competing against educated immigrants and educated workers employed overseas.

The issue isn't a lack of economic growth, which was solid for most of the 2000s. Rather, it's that the fruits of growth are flowing largely to "a relatively small group of people who have a particular set of skills and assets that lots of other people don't," says Mr. Bernstein. And that "doesn't necessarily have that much to do with your education." In short, a college degree is often necessary, but not sufficient, to get a paycheck that beats inflation.

Economists chiefly cite globalization and technology, which have prompted employers to put the highest value on abstract skills possessed by a relatively small group, for this state of affairs. Harvard University economists Lawrence Katz and Claudia Goldin argue that in the 1990s, it became easier for firms to do overseas, or with computers at home, the work once done by "lower-end college graduates in middle management and certain professional positions." This depressed these workers' wages, but made college graduates whose work was more abstract and creative more productive, driving their salaries up.

Indeed, salaries have seen extraordinary growth among a small number of highly paid individuals in the financial sector -- such as fund management, investment banking and corporate law -- which, until the credit crisis hit a year ago, had benefited both from the buoyant financial environment and the globalization of finance, in which the U.S. remains a leader.

Richard Spitzer is one of those beneficiaries. He received his undergraduate degree in East Asian studies in 1995 from the College of William and Mary and graduated from Georgetown University's law school in 2001. The New York firm for which he works, now called Dewey & LeBoeuf, has a specialty in complex legal work for insurance companies. There, Mr. Spitzer has developed an expertise in "catastrophe bonds." An insurance company sells such bonds to investors and pays them interest, unless an earthquake, a hurricane or unexpected surge in deaths occurs.

Experts in these bonds are "probably a rarefied species -- there's only a few law firms that do them," says Mr. Spitzer, 35 years old. He typically spends two to four months on a single deal, ensuring that details like timing of payments or definition of the triggering event are precise enough to avoid disputes or default.

Mr. Spitzer's salary has doubled to $265,000 since joining in 2001, in line with salaries similar firms pay.

But not all law graduates are so fortunate; many, especially those from less-prestigious schools, have far lower salaries and less job security. Similarly, some computer-science graduates strike it rich. But their skills are not as rare as they were in the early 1980s, when the discipline took off, and graduates today must contend with competition from hundreds of thousands of similarly qualified foreign workers in the U.S. or overseas.

The Declining Value of Your College Degree

in a nutshell:

(entire article posted here)

• the returns to a Bachelor's degree dropped between 2001 & 2007
• the returns to advanced degrees increased between 2001 & 2007
  

The rising inequality described in this article is the subject of Goldin & Katz's The Race Between Education and Technology. Their explanation, however, is quite different in substance and in emphasis.

Goldin & Katz's book isn't about the horrors of globalization. It is so not about the horrors of globalization that the word globalization doesn't even appear in the index.

The word outsourcing appears once:

Even though international outsourcing has been blamed for the decreased utilization of the less educated, the facts in this case argue against that explanation as being the primary factor. Large within-industry shifts toward more skilled workers occurred in sectors with little or no foreign outsourcing activity, at least in the 1980s and up to the late 1990s. (p. 98)

Goldin and Katz document and analyze a race between eduction and technology. As technology advances, the demand for educated workers advances, too. This has been true since the end of the 19th century.

(Prior to that, advancing technology reduced the demand for skilled labor, as when the invention of factories reduced the demand for skilled artisans.)

The law of supply and demand determines wages. For 75 years, American public schools created a continuously increasing supply of educated workers, more than any other country in the world. Because we produced so many educated workers, income inequality steadily fell.

That changed in 1980. We are no longer seeing enormous gains in educational attainment from one generation to the next. It used to be that kids were always much more educated than their parents; those days are gone.

Meanwhile, the advance of technology has not slowed. We are producing more high-level jobs, and fewer high-level workers. This means the highly educated earn more while others earn less.

The two charts below accompanied the WSJ article:





The second chart is the important one. This chart goes back to 1976. Look how close the lines are in 1976. The difference between a lawyer and a plumber back in the day wasn't that big. I'm old enough to remember that time. Newspapers and magazines were filled with articles arguing that college wasn't worth the money because you could get rich being a really good plumber.

Then look at the difference between a plumber and a lawyer today.

Winner take all.

Given the (apparently) related fact that we also see rising within group inequality, I see two rational responses:

• do everything in your power to see to it that your kids receive a superb education up through graduate or professional school
• carry on lobbying schools & governments to fix the schools, which, in my case means supporting charters & vouchers as well as school reform
  

Steve Levitt summarizes The Race in 2 sentences
Jimmy graduates

The anemic response of skill investment to skill premium growth
The declining American high school graduation rate: Evidence, sources, and consequences
Pushy parents raise more successful kids

The Race Between Education and Technology book review
The Race Between Ed & Tech: excerpt & TOC & SAT scores & public loss of confidence in the schools
The Race Between Ed & Tech: the Great Compression
the Great Compression, part 2
ED in '08: America's schools
comments on Knowledge Schools
the future
the stick kids from mud island
educated workers and technology diffusion
declining value of college degree
Goldin, Katz and fans
best article thus far: Chronicle of Higher Education on The Race
Tyler Cowan on The Race (NY Times)
happiness inequality down...
an example of lagging technology diffusion in the U.S.
the Times reviews The Race, finally
IQ, college, and 2008 election
Bloomington High School & "path dependency"
the election debate that should have been

the future

"The future of inequality depends largely on increasing the supply of educated workers," she said.

Goldin discusses economic disparity and wages
The Davidsonian online
4-23-08

Steve Levitt summarizes The Race in 2 sentences
Jimmy graduates

The anemic response of skill investment to skill premium growth
The declining American high school graduation rate: Evidence, sources, and consequences
Pushy parents raise more successful kids

The Race Between Education and Technology book review
The Race Between Ed & Tech: excerpt & TOC & SAT scores & public loss of confidence in the schools
The Race Between Ed & Tech: the Great Compression
the Great Compression, part 2
ED in '08: America's schools
comments on Knowledge Schools
the future
the stick kids from mud island
educated workers and technology diffusion
declining value of college degree
Goldin, Katz and fans
best article thus far: Chronicle of Higher Education on The Race
Tyler Cowan on The Race (NY Times)
happiness inequality down...
an example of lagging technology diffusion in the U.S.
the Times reviews The Race, finally
IQ, college, and 2008 election
Bloomington High School & "path dependency"
the election debate that should have been

the new math in Germany

Wonderful comment left on Gadfly:

Back in 1974 my family spent nine months in a Munich suburb while I was on sabbatical there. Our two youngest children attended the local elementary school. Early on, big news was a report of a formal action by the German equivalent of the American Medical Association proclaiming that the "New Mathematics" (which was then also the fashion in the U.S.) caused serious damage to the human brain. My wife (who has a PhD in mathematics) cleared up my puzzlement about this as follows: German children (and ours) went to school very early in the morning and returned home after the end of the school day about 1:00 pm. The afternoon was devoted to music lessons, athletics, and homework. In the households of German physicians, they were supervised by very competent well educated mothers. (Then, and perhaps now, German women remained more domestic than those in other countries.) This gave the children of physicians an intellectual advantage, and they moved on to universities in higher proportions than children of lesser parents. The problem with the "New Math" was that the physicians and their wives had no clue about it, so their relative advantage was obliterated. Hence the action of the German AMA.

In my experience, parent teaching (and hiring of tutors) is an unacknowledged source of a great deal of within-group inequality in high-performing districts.

why aren't more people going to college?

Let's ask Tyler Cowan.

I can only conclude that Altonji, Bharadwaj, and Lange have never taught Introduction to Composition to a large group of freshman in a public university in the United States. Anyone who has taught such a class -- or for that matter talked to anyone who has -- will have some inkling why more people are not going to college. Herein lie the roots of growing inequality -- on the bottom side at least -- and don't let anyone induce you to take your eye off the ball by playing switcheroo and bringing up the (separate) topic of the growing wealth of the top one percent.

factoid: I myself have taught such classes.

Clicking around the web, reading posts about The Race Between Education and Technology, I fear we are in danger of embarking upon yet another round of research papers and newspaper op-eddery finding that parent education predicts, causes, and fully accounts for the educational attainment of children:

Research summarized in Cunha and Heckman (2007) suggests that part of the explanation [for why the supply of skills is inelastic] might be that parental investment during early childhood shapes the potential to acquire additional skills later in life.

The anemic response of skill investment to skill premium growth

That's the kind of thing that will lead directly to Universal Pre-K, if the edu-world has its way.

Which it will:

It is well documented that people are diverse on a vast array of abilities, that these abilities account for a substantial portion of the variation found across people in their socioeconomic success, and that persistent ability gaps across children from various socioeconomic groups open up at early ages before children enter school. The family plays a powerful role in shaping these abilities through genetics, parental investments and through choice of child environments. From a variety of intervention studies, it is known that ability gaps in children from different socioeconomic groups can be reduced if remediation is attempted at early enough ages. The remediation efforts that appear to be most effective are those that supplement family environments for disadvantaged children. Cunha et al. (2006a), henceforth CHLM, present a comprehensive survey and discussion of this literature.
Cunha, Flavio and James J. Heckman, “The Technology of Skill Formation”, IZA DP No. 2550 (pdf file)

Once we've got 3 year olds constructing meaning in public pre-schools staffed by accredited teachers, we can wave good-bye to the skills gap.

Glancing through the Heckman paper, I can see the shape of things to come. Declining high school graduation rates will be viewed as a species of disability, the prescribed treatment being early intervention: universal pre-K.

School has no effect on children born to uneducated parents, but pre-school will.

Because it's early.

I wonder what Heckman thinks of Levitt and Fryer....

Compared with the results of previous studies, our findings provide reason for optimism. We find smaller achievement gaps, in both the raw and the adjusted scores, for children born in the early 1990s than others had found for earlier birth cohorts. It could well be that, as compared with earlier generations of students, the current cohort of blacks has made real gains relative to whites. Indeed, recent cohorts show smaller raw black-white gaps across multiple data sets—a truly promising sign.

Once students enter school, however, the gap between white and black children grows, even after controlling for observable influences. We speculate that blacks are losing ground relative to whites because they attend lower-quality schools that are less well maintained and managed as indicated by signs of social discord. Though we recognize that we have not provided definitive proof, this is the only hypothesis that receives any empirical support.

Falling Behind
Steven Levitt & Roland Fryer

Heckman doesn't seem too crazy about Levitt. So perhaps he disagrees with Levitt's & Fryer's paper.

Be that as it may, I despair.

Has none of these people had a child in public school recently?

Or spoken to a person who does?

Has none of them thought about the implications of rising within-group inequality?

[E]ven within groups with the same level of education, the gap between high and low earners has widened, too. Indeed, the more advanced the degree, the wider the gap becomes. A satisfactory theory must therefore explain not only why the demand for college educated workers has risen but also why "residual" inequality has increased, that is, the part that is unexplained by education and other observable factors.

Economic Inequality in the United States

The "powerful role" I personally have played in my typical child's educational attainment did not begin at birth and end at age 3. Those were the easy years.

Within-group inequality is not a mystery to me.


Steve Levitt summarizes The Race in 2 sentences
Jimmy graduates

The anemic response of skill investment to skill premium growth
The declining American high school graduation rate: Evidence, sources, and consequences
Pushy parents raise more successful kids

The Race Between Education and Technology book review
The Race Between Ed & Tech: excerpt & TOC & SAT scores & public loss of confidence in the schools
The Race Between Ed & Tech: the Great Compression
the Great Compression, part 2
ED in '08: America's schools
comments on Knowledge Schools
the future
the stick kids from mud island
educated workers and technology diffusion
declining value of college degree
Goldin, Katz and fans
best article thus far: Chronicle of Higher Education on The Race
Tyler Cowan on The Race (NY Times)
happiness inequality down...
an example of lagging technology diffusion in the U.S.
the Times reviews The Race, finally
IQ, college, and 2008 election
Bloomington High School & "path dependency"
the election debate that should have been

the Great Compression, part 2

the Great Compression, part 1:

[I]nequality decreased in the 1940s and the reductions were substantial. The narrowing of the wage structure during the 1940s has been termed the "Great Compression." It involved a world war, inflation, tight labor markets, rising union strength, and substantial government intervention in the labor market.
p. 54

Apparently, the "Great Compression" is famous amongst economists and economic historians; it has been studied extensively.

As it turns out, the "Great Compression" was not a post-Depression phenomenon. It went on for many decades, and it preceded the Depression. The argument of The Race Between Education and Technology, assuming I have this right, is that education was the most important cause of three quarters of a century of declining inequality -- as well as the most important cause of the steadily rising inequality that commenced in the late 1970s:

The data series we unearthed and compiled revealed that the wage structure and the returns to education and skill all moved in the direction of greater equality decades before the better known Great Compression of the 1940s. The wage structure narrowed, skill differentials were reduced, and the return to education decreased sometime between 1890 and 1940, most likely in the late 1910s. The entire compression of the wage structure across the twentieth century, therefore, was larger in magnitude, lengthier in duration, and more complicated in its reasons than has been previously recognized.”
The Race Between Education and Technology, p. 57

The book is revolutionary.

Thus far it confirms everything many of us have assumed -- felt, in my case -- to be true.

Steve Levitt summarizes The Race in 2 sentences
Jimmy graduates

The anemic response of skill investment to skill premium growth
The declining American high school graduation rate: Evidence, sources, and consequences
Pushy parents raise more successful kids

The Race Between Education and Technology book review
The Race Between Ed & Tech: excerpt & TOC & SAT scores & public loss of confidence in the schools
The Race Between Ed & Tech: the Great Compression
the Great Compression, part 2
ED in '08: America's schools
comments on Knowledge Schools
the future
the stick kids from mud island
educated workers and technology diffusion
declining value of college degree
Goldin, Katz and fans
best article thus far: Chronicle of Higher Education on The Race
Tyler Cowan on The Race (NY Times)
happiness inequality down...
an example of lagging technology diffusion in the U.S.
the Times reviews The Race, finally
IQ, college, and 2008 election
Bloomington High School & "path dependency"
the election debate that should have been

end brain-based education now

Paula V sparked my interest in reader Comments on the algebra-in-8th story.

Here we go again:

Here's the thing. According to Piaget, the formal operational stage doesn't even begin to develop until students are of high school age or even older for some. Oh, and formal operational means that a person can think abstractly. And the ability to think abstractly is important if you are going to learn algebra because algebra is all about abstraction. So what are we really teaching? If a child is not yet ready to think abstractly, are we really teaching anything or are we doing harm? We are asking students to learn things they are not ready to learn. How can that be good? Oh, and here's another thing, not everyone ever enters or completes the formal operational stage of development. So how much algebra will that person ever learn?
6/5/2008 6:22:50 PM

Its amazing that people are able to make statements like these without reference to actual living, breathing, math-learning (or not), flesh and blood children.

Supposing Piaget did say 8th graders can't learn algebra.....(did he?)....shouldn't we ask ourselves how it is exactly that 8th graders everywhere else on the planet are able to learn algebra while American kids are not?

How long ago was Piaget debunked, anyway?

News travels slow in the edu-world.

The belief that children of particular ages cannot learn certain content because they are "too young" or "not ready" has consistently been shown to be false.
National Math Panel Fact Sheet

this one's fun:

Welcome to America....where people are actually having a serious discussion about whether teaching kids advanced math as soon as possible is a bad thing. Is it any wonder our country lags behind in math/science?

and this one:

It's surprising to me that it pushing to take Algebra I in the 8th grade is thought of as acceleration and that some parents in Montgomery county are resisting it. My dad went to an inner city black school in a southern city in the 60's and he took algebra in the 8th grade and took calculus before he graduated high school. Yet, Algebra I wasn't available to me in the 8th grade in a rural school many years after integration, and I ended up having to double Algebra II and Geometry my sophomore year in high school in order to take Calculus. Somewhere along the line we slid backwards. None of this stuff is advanced math. Just the basics American students will need to be competitive on the world scale in Engineering and Science.

here we go, "freakshow stage parents" -- good one!

This all seems analogous to the freakshow stage parents who pressure their kids to succeed in spelling bees and beauty pageants so they can brag on their kids to their friends. Seriously, do any of you out there remember anything past Algebra II who aren't currently in an engineering field. I use high-end statistics daily and got very limited exposure to it until grad school. My thought, pipe down a bit on the rush to calculus...there is plenty of time for that in college; rather focus on stats since it seems like analyzing data has permeated into lots more fields than in the past. Performance indicators and measurement are the next trend in management and should receive more attention than calculus in my opinion. Many old school managers rarely used math to make decisions whereas now managers are responsible for developing systems and metrics which can quantitatively track progress toward stated goals and objectives.

reading right along.... another Piaget comment from a physics teacher, no less. I'm not cutting and pasting any more from JP.

sigh

Piaget has a lot to answer for.

from France:

I went to a French boarding school through 10th grade (troisieme in their parlance). Upon returning to the United States I spent two years reading French novels in the back of the class, raising my hand and going to the blackboard only when others couldn't solve problems being discussed in class. I didn't do any homework either, and graduated only because the teacher who announced a week before the end of my senior year that he was going to grade us 50% on the year's homework got called to a conference, and ended up grading us only on tests.

I can't see that allowing students to take more demanding courses is a bad thing.

Here's the one Paula quoted:

So Prince William county is slowing their kids to a crawl with Investigations while the neighboring counties are moving their kids ahead at a faster pace.
We really need a national math curriculum.

Slowed to a crawl. Yup.

The help-with-homework issue rears its ugly head:

Many decades ago, I minored in math. I can still use the stuff, too. But I work with lots of people educated in social science and humanities who can't deal with fractions or proportions, let alone scientific notation or long division of polynomials.

Given that these educated people are parents, what are the chances that the average parent will be qualified to help their kids with math homework in the grades?

I know the answer to that one.

Slim to none.

Next:

"Accelerated Math Adds Up To a Division Over Merits"

Yes, you're so right, I just think that Albert Einstein kid was a little too "smart for his britches" and should have been held back a couple of years!

That would have made it much fairer for the other students in his classes.

Another Stop Manic Moms and Dads! sentiment:

The issue here is not whether children should or shouldn't be in accelerated math programs, it's whether parents should be allowed to pressure teachers and administrators. Children should be placed based on performance only to prevent manic moms and dads from pushing their children beyond their level.

This is a big one around here.

For years we were told that the accelerated math class was filled with "kids who don't belong" and got in thanks to "pushy parents" etc.

That particular meme went splat after the district clamped down on the pushy parents and required all the kids to test into the class. The first placement test was Top Secret; the middle school refused to show a copy to the 4-5 teachers in order to prevent them from prepping their students. The goal was to cut kids from the track, not help kids get into it, so the grade school teachers had to be kept in the dark.

Lo and behold, the kids who tested in fair and square also had a he** of a time of it.

C. was one of them.

Moving right along:

american grade school math has always been a sad joke. Europeans learn algebra+geometry in 7th grade. I support accelerated math.

and:

The advanced part isn't what is new, it is the quotas (80% of 8th graders are expected to be in Algebra) that are new.

Pushing the regular kids into advanced math is just as bad as keeping the advanced kids in regular math.

Why can't we just teach them what they are ready for? (because we don't have the time or money to teach individuals in our school system)

That's sure my beef.

Next:

Back in the 1950's I went through an accelerated math program like the one described here. The idea can't be all that new.

Things went downhill fast after the 1950s. See: The Race Between Education and Technology.

old chestnut:

I would forewarn the stories from Japan with their relatively high suicide rate of children from the pressure brought to bear on them to excel, mostly for the parents sake rather than the childs.

There isn't any higher teen suicide rate in Japan.

There is a higher teen suicide rate here. (see: Stigler, The Learning Gap)

"My wife is a teacher. Everyday, she sees pushy parents who insist that their kids are "gifted." It's a disgusting conceit on the part of loser parents who want to pretend that their failures can be fixed by their kids"

I think it works both ways. Teachers will hold truly gifted children back. My daughter was tagged as "gifted" through testing and I put her in an accelerated math program outside of school (loving it doing well too), but her school is refusing to commit to placing her in the high level math class. This is private school and they are control freaks. I'm thinking of putting her in public school where it sounds like she'll get more of an appropriate education.

And really, most parents want what's best for their child so your comment is rather inflammatory and I'm sure untrue.

Pushy parents! Holy moly, life would be good without pushy parents, for sure.

Having taught pupils of many nationalities and from widely varied backgrounds, I would affirm that children from the U.S.A. are extremely backward compared with others around the world, resulting in widespread adult ignorance. Some pushing along would certainly not come amiss!

Here's the full version of the pushy parent quote:

According to the article:

"I think parents of what I call above-average to gifted kids . . . were all saying, 'Our kids are bored,' " said Louise Epstein, a Fairfax mother and president of the Fairfax County Association for the Gifted.

My wife is a teacher. Everyday, she sees pushy parents who insist that their kids are "gifted." It's a disgusting conceit on the part of loser parents who want to pretend that their failures can be fixed by their kids.

Get a grip--suck it up. If your kid can hack it, all the better. I'm concerned that teachers, beaten down to nothing, will submit, merely to survive to the next paycheck.

I for one am not remotely concerned that teachers will "submit." They won't. History tells us this is true.

Will they feel beaten down & survive from one paycheck to the next? Yes. Algebra in 8th grade will, like everything else in the edu-world, be implemented from the top down with teachers being handed heterogeneous groups of kids half of whom won't remotely be ready to learn algebra. It will be a miserable experience.

That's not because of pushy parents.

That's because of pushy administrators.

Pushy parents have even less control over the administrative practices of public schools than teachers do.

Grade level math might be better termed decelerated math. I remember 4th-7th grade math as utterly boring and repetitive. Algebra got me interested again--in the 8th grade. I would have enjoyed an earlier shot at it.

and, last word:

Isn't there time in high school for advanced math? I don't remember doing much algebra in grade school (grades 1-8), but in my prep school we were required to take algebra I, algebra II, geometry, trigonometry, calculus I, and calculus II. In other words, I was always in a math course, all the way through high school. I didn't like any of it, but I had no choice.

Still, I guess it was good for me, as I could always count on a 99th percentile score in any standardized test I took. SAT, GMAT, etc. Isn't that good enough?

I say let the parents/kids chose, at least for the grade school kids.

the Great Compression

from The Race between Education and Technology:

[I]nequality decreased in the 1940s and the reductions were substantial. The narrowing of the wage structure during the 1940s has been termed the "Great Compression." It involved a world war, inflation, tight labor markets, rising union strength, and substantial government intervention in the labor market.
p. 54
the Great Compression, part 2

The book is riveting.

A page-turner.

Steve Levitt summarizes The Race in 2 sentences
Jimmy graduates

The anemic response of skill investment to skill premium growth
The declining American high school graduation rate: Evidence, sources, and consequences
Pushy parents raise more successful kids

The Race Between Education and Technology book review
The Race Between Ed & Tech: excerpt & TOC & SAT scores & public loss of confidence in the schools
The Race Between Ed & Tech: the Great Compression
the Great Compression, part 2
ED in '08: America's schools
comments on Knowledge Schools
the future
the stick kids from mud island
educated workers and technology diffusion
declining value of college degree
Goldin, Katz and fans
best article thus far: Chronicle of Higher Education on The Race
Tyler Cowan on The Race (NY Times)
happiness inequality down...
an example of lagging technology diffusion in the U.S.
the Times reviews The Race, finally
IQ, college, and 2008 election
Bloomington High School & "path dependency"