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Skills vs. Education

I’m no Andrew Leigh or Andrew Norton when it comes to thinking about education and the economics thereof, but what the hell … I wrote the following back in 2005 for some reason and thought it worth sharing:

I see some confusion about the differences between ‘educated’ and ‘skilled’ that I think many people are unappreciative of, unaware of, or quite deliberately gloss over. In part, I guess, it’s affected by the hodgepodge of meanings attached to the word ‘education’ itself. It’s certainly the acquisition of something, but is it ‘skills’, or is it ‘An Education’ (capitalisation deliberate)?

“An Education” is what some people might refer to as intellectual spinach – it’s good for you, eat it! – and is the logical extension of what the US calls Social Studies. It’s a look at history, the make-up of your society, your government, the philosophies that underpin it and so forth. It is, in essence, what used to be regarded as essential in the British upper-middle classes for spitting out a ‘gentleman’ and could perhaps be summarised as “the world and your place in it”.

Skills, on the other hand, are what make you productive and therefore, valuable, to the economy. Skills are what businesses want and to a certain extent, all they’re interested in from their workforce.

The confusion comes about because, by simple virtue of our humanity, technology progresses. The things we do continually require less effort – fewer inputs, less physical work – to produce the same output. As such, the history and future of mankind as economic agents is entirely about a progression away from the physical and towards the intellectual and with that moves the skill-requirements of industry. This has made the acquisition of skills and the acquisition of “An Education” overlap. To excel in either now requires critical reasoning and imagination.

This hasn’t escaped the politicians of the world and when they speak of a skilled workforce being needed to take the economy forward, they’re talking about intellectual skills. They see universities as factories for producing skilled workers and this grates with those in academia who see universities as secular temples – places where supplicants go to seek enlightenment.

As society has progressed and the intellectual demands of the economy have grown, we’ve seen a corresponding increase in the number of years that a person spends in schooling before entering the workforce. I don’t doubt in the slightest that when people complain that two or three extra years is just blocking a person from being productive was made with the same force back when the push first came for most people to finish grade 12 at school rather than stopping at 10. Whatever the extension, the gist of it is to emphasise the intellectual development for longer and postpone the skills training until afterwards. The latest suggestion is just to hold off on the “skills” for a masters and to work on your critical reasoning through your undergrad.

This sounds fine in theory (we live longer and we earn more in real terms, so the cost of delaying our entry to the work force pays off), but it faces an ultimate dilemma in my opinion, and not just that we’re running out of academic levels to force kids through. The years of schooling that we force on our young has now extended well past the time of their physical and, to a large extent, psychological maturing. A kid is no longer expected to buck against the unfairness of the world while welding something in a factory, but to do it at university. That’s fine so long as there’s development of some kind to be had – we’ve always tied education to development – but what about when the person is a physically, psychologically and emotionally mature adult?

The technological progress of the world is not just continuing, either – it’s accelerating. That means that the rate at which the insufficiently skilled lose their value is only going to increase and with it, the demand for mid-life education is going to grow.

Thus, to my mind, there should be an almost fundamental rethink on how we allocate the fraction of our lives in education. Instead of doing all of it in one long burst at the start of our lives, we should be doing a large part of it initially, while we physically and psychologically develop, but then spread the rest out over time as we need it. Make the start-of-life education first and foremost about surviving in society, then focus on essential, universal skills and the development of critical thinking before just touching, broadly, on your career of choice. Then work for a time before returning to study to focus and specialise.

In addition to not forcing people to stay as underling students past their maturity, this allows people to change career direction with reasonable ease and for those people who don’t find what they want at university to not be discriminated against for the rest of their lives because education is a process and not an event that they missed.

Essential skills are the things that we probably all groan about: Typing, computer-use intuition, communication skills, both written and verbal. The things, in essence, that make a productive (though boring and uninspired) office worker.

This also addresses part of the question of university funding. The argument for free education centres around the fact that students have never had a job and so can’t pay for it up-front. The argument for making them pay up-front anyway hinges on an efficient capital market that allows them to borrow against future earnings. [Note added in 2008:  I was pretty clearly ignoring the idea that parents could afford to pay the lot for their kids] Continuing education as I’ve described it would only happen after a person has been working for some time and has had a chance to save, so the problem is moot: Make them pay.

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Oh please, oh please, oh please

Mr. Rudd, call Andrew Leigh.  Call him now.  Speaking on Indigenous policy, he writes:

  1. School attendance rates are appalling, and as Woody Allen says “90% of life is just showing up”. So pay Indigenous children to attend school.
  2. Literacy and numeracy gaps are large, and part of the difference may be teacher quality. So the federal government should promise bonuses of up to $50,000 to teachers who can get large improvements in performance in Indigenous schools. Teaching disadvantaged kids is the most important job in Australia – so why does no-one doing it earn a six-figure salary?
  3. Indigenous people are overrepresented in Australia’s jails, which do little more than warehousing. Since many are now private, why not rewrite the contracts, making payment conditional on post-release recidivism and earnings? Let’s create incentives for those who run jails to do more education, and less clock-watching.
  4. A major impediment to children attending school is drunkenness in communities. But a ban is a drastic measure. Let’s allow communities to set their own tax rates on alcohol, and keep the revenue (remember, a ban is effectively a tax rate equivalent to the cost of petrol to the nearest no-ban town).
  5. As many Indigenous policies as possible (including those above) should be subjected to rigorous randomised trials. Those that fail should be discarded without sentiment, and those that succeed should be expanded. We know from the headline indicators that many Indigenous policies haven’t worked; it’s time to start sorting out the wheat from the chaff.

Amen.

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Sex for free

Following on from my earlier post noting (via Andrew Leigh) that Steven Levitt and Sudhir Venkatesh have been researching street prostitution in Chicago, Andrew managed to find a link to a preliminary draft of the paper. You can find it here. Andrew also noted that:

Levitt cited evidence that in the 1930s-50s, a very large share of men had their first sexual experience with a prostitute. With the rise of premarital sex, this is no longer true, so the market that’s left today is much seedier than in the past.

This would seem to imply that early sexual encounters once represented a sizable, or at least influential, portion of demand, which is interesting in itself.

Many modern-day feminists despair at the way that the so called “sexual revolution” has developed and I do wonder where the current arc of embracing sexuality will stabilise.

Here is a recent story from ABC News being shocked (shocked!) to discover that college parties are both racier and boozier than they used to be at some unspecified time in the past. They report (and fret) that girls seem to drink more at themed parties, where they also tend to wear less.

Here is a story about the merging of reality television and the public acceptability of sex for it’s own sake. A Czech brothel is offering it’s services for free in exchange for the clients’ permission to broadcast the event over the internet.

I suspect that the Czech offering is just the latest in a recent push for a form of authenticity or believability in pornography. It seems to go hand-in-hand with an increase in the popularity of amateur porn, which has two broad sub-categories: the professionally arranged and the truly amateur.

Truly amateur pornography, where the participants film or photograph themselves and share the material for free is arguably the ultimate sharing of the self in the web 2.0 paradigm [1]. It is a logical extension of the attention-seeking self-affirmation that we see in people’s embracing of a public side to their sexuality.

Professional outfits that seek out amateurs who are willing to be filmed (possibly for free) and then offer the material in the traditional business model of internet porn (give out teaser snippets for free and charge for the complete set) , seem to be the adult industry’s response to this shifting demand. In a way, the Czech brothel is just a new branch of this genre.

These developments are not without their concerns. Sara Montague – a presenter on BBC Radio 4’s Today programme – is clearly concerned, noting that much of the movement seems grounded in the hope of empowerment and self-confidence, but worrying that this serves indirectly to promote eating disorders among girls and the acceptance of rape among boys.

The main problem that Montague faces is that for most people, embracing public sexuality is non-harmful – not every girl gets an eating disorder and not every boy contemplates forcing himself on a girl – and is undertaken by choice. Montague is, in essence, faced with Douglas Adams’ cow that wants to be eaten. [2]

There is a saying that seeks to advise against supporting or encouraging prostitution: “No little girl ever says that when she grows up, she wants to be a prostitute.” The idea is a variation on Rawls‘ “veil of ignorance” and implicitly argues that the framing of a choice is of vital importance: that given a wider range of options than those she faces, no woman would choose to be a prostitute.

Montague may argue that just as the prostitute is compelled into her profession by a narrowing of her options, people are lead to an acceptance of public sexuality because of social conditioning. In her article she highlights the flood of media imagery seemingly designed to associate female success with sexiness. In other words, Montague is pointing out that Adams’ cow was genetically engineered to want to be eaten and asking if the cow then truly had a free choice. That question, of course, is moot when considering the cow in front of you. Its preferences may have been implanted, but as a conscious entity, you have to respect it’s choices. At most, you can try to stop future cows from being interfered with.

But to make the same argument for public sexualisation is still predicated on the idea that it is inherently a bad thing. I am not in any way trying to belittle the tragedy of eating disorders or defend the horror of rape, but the point is to weigh the benefits against the costs in aggregate. There is a parallel with opening a country up to trade and allowing jobs to be “lost” to, say, China. It is true that some people will lose their jobs and for them, the pain is tremendous; but it is also true that the vast majority of people experience a small improvement in their material lives because of the cheaper products. It is almost always the case that in aggregate, the latter outweighs the former and the social ideal is to open up to trade but have those that benefit compensate those that suffer.

The same, I think, applies to the progress of public sexualisation. By all means work to increase support for those burdened excessively by concerns of body image. By all means increase support to rape victims and ease the ability of the state to bring those guilty to justice. But that doesn’t mean we should fight to stop it altogether if people choose it freely and feel that it helps them, or even if they just enjoy it.

[1] Yes, I hate that word too; but what else should I have said?

[2] In The Restaurant at the End of the Universe (Foyles, Waterstones, Amazon), Adams had his characters encounter a cow in a restaurant that wanted to be eaten, going so far as to recommend particular parts of it’s body.

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Interesting empirics

I cannot wait to read the paper coming out of this:

Most women work 11 hours a week and … make $25-40 per hour [versus] $7-10 per hour … in the formal sector.  They are violently victimised once a month.

Prostitutes who work with pimps have higher wages and better conditions.

Supply is quite elastic [a 60% shock in demand occurred with only a 30% increase in prices], adjusting on three margins – higher labour supply by existing prostitutes, in-migration by prostitutes from other areas, and ‘temporary prostitutes’ joining the market.

Doing this research in America, where both the provision and the consumption of prostitution is illegal, is a major achievement for Levitt and Venkatesh.  Has anything equivalent ever been done in countries where the law is less restrictive?

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Andrew vs. Andrew (continued)

Following on from yesterday, Andrew Norton has his second piece up [A.N., A.L.].  He continues on the early topic of teaching civics, concluding with:

In my view, preserving public education to teach civics is a non-solution to a non-problem.

I’d love to see a longitudinal study looking at what people covered in school and measures of their criminality, understanding of and participation in democratic society one, five and ten years after leaving school.  Until then, this aspect of the debate will continue to be rhetorical.

A.N. then moves on to the topic of financing, acknowledging A.L.’s point that there are economies of scale but arguing that they could be achieved through school associations or chains.  He suggests that the government still be involved, subsidising schools on a per-student basis inversely weighted to the students’ socio-economic backgrounds:

[W]e could fund all schools on a similar basis to private schools now, according to parental SES background. That would lead to reduced rather than greater government expenditure, with tax cuts helping parents finance higher private outlays. Schools servicing the most disadvantaged areas would get the most money, providing what was necessary to make private schools viable. Schools in the most affluent areas could be taken completely out of the public funding system; this if nothing else about my proposal would please the AEU. 

This seems a reasonable and persuasive point to me.  However, since it would amount to the government paying for the schooling of the poor, it seems implausible to assume that they would not want a say in how the money was spent.  It would be, in effect, an Australian education equivalent of Railtrack/Network Rail in the UK – a nominally independent organisation that nevertheless operates with a government-backed guarantee of funding to achieve government-stipulated requirements.  This may well represent an improvement over the status quo (and I suspect it would be, from a financing point of view), but it is not full privitisation.

I was never particularly concerned with financing except insofar as it affects selection.  This sort of scheme, which does keep the government involved, may help ensure that every child gets accepted somewhere, but my concerns about student complimentarities and the need for national education standards remain.

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Worth following …

Andrew Leigh and Andrew Norton (you can find a brief introduction to each of them here) are having a “bloggish debate” on whether public schools ought to be privatised. You can follow the entire discussion at either of their blogs. We thus-far have an initial comment from both. The first came from Andrew Norton [A.N., A.L.]:

… The government owns most schools, employs most teachers, tells them what to teach through state-set curricula, and examines students to make sure they have it right-even kids escaping to private schools can’t avoid these last two aspects of state-run education … Across the political spectrum, activists want to use public education to influence young minds. In his book Dumbing Down, Kevin Donnelly documents how left-wing academics and teachers shape curricula to fit their political agenda. In government, the Liberal Party proposed a national history curriculum, which was widely seen as another front in the so-called ‘culture wars’. Rather than fostering social unity, as some of its supporters claim, state-controlled education is a source of division and nastiness. Instead of allowing different groups to devise their own curriculum, and letting parents choose between them, we fight over a common curriculum …

In response, Andrew Leigh argued [A.N., A.L.]:

… indoctrination isn’t all bad. I’d like to live in an Australia where children shared a basic understanding of democratic values, and understood our geography and our history. I’m more confident that public schools will achieve this than I am about private schools … you’re either arguing (1) for the private school funding to be raised to the same level as public school funding, or (2) for the government to get out of the schooling game entirely. Fortunately, we have an interesting natural experiment of reform (1). In 1981, the Chilean military government passed a law (or whatever dictatorships do to put things into effect) that gave the same per-child funding to non-government and government schools. Fifteen years later, 62% of kids were still in government schools … Public education is worth preserving because it helps engender shared knowledge and values; because a public system guarantees access for all children; and because its economies of scale will often make the public sector more efficient than the private sector.

I love reading both Andrews on education. They’re clearly both incredibly smart and thinking incredibly hard on a topic to which most people simply apply a few platitudes and rules-of-thumb. A few of my thoughts, which I’d love to see them discuss at length:

Selection. Private schools are selective, meaning that only the smartest (or wealthiest, or most religious) students are granted access. If the entire system were privatised, what school would accept the academically-below-average, non-religious poor?

Conformity risk. On the other hand, the one-size-fits-all approach so often seen in public education is an imposition of conformity and can lead to the supression of individual talents.

Student complementarities. The success of a student in a subject is arguably positively influenced by the success of their classmates. Even if complementarities do not exist in student ability, they may still exist in student behaviour. Separating the most- and least-able (or most- and least-disruptive) students will benefit those in the advanced grouping and disadvantage those in the lower group. If present, this effect will be greatest for students close to the cut-off in both directions, meaning that there will be a sharp, essentially discreet difference in group performance.

(Dis)Economies of scale and profitability. As mentioned briefly by Andrew Leigh, schools experience economies of scale in minimising costs. However, there are also diseconomies of scale in maximising student performance once classes get too large. This means that private schools would not set-up shop in areas of low population density and that public schools focused on getting the maximum quantity of education for the minimum cost often sacrifice quality in areas of high population density.

Standards and externalities. Government involvement helps ensure that a common, minimum set of standards are met by all students. Employers and universities need to be sure that school-leavers have certain key skills and be able to compare candidates from different schools. I’m happy to assume that the market would produce a generally-trustable measure of the first of these requirements, but not the second. Witness the lack of interstate university attendance in Australia where there is poor comparability of students across states, compared to the high student mobility in the U.S. where the S.A.T. serves as a single, national standard. The S.A.T. is not perfect, but the comparability it offers increases competition in both directions between student and university.

In addition, society as a whole may wish for a third set of standards that are not direct prerequisites for employment or university, such as a minimum understanding of history or civil society. This final point rests on the positive externality of such education. A country’s institutional strength – arguably a cornerstone of growth – may rest on a commonality of feelings of civic duty, for example.

Teacher quality and incentives. I doubt there will be much disagreement between the two Andrews on this one. If they mention it at all, I suspect both will support some form of incentive pay to teachers on the basis of student performance. Personally, I would argue that to the extent that student complementarities exist, at least some of any incentive payment ought to go to the school as a whole. I also wonder if the measure of success ought to be broader than on-the-day performance on a standardised test and perhaps attempt to focus on the students’ outcomes. For example, one year after leaving school, look at whether students are employed or in higher education and if they are in the latter, look at the cut-off for the course they chose.

Full disclosure: I attended a state school for years 1 to 7 and a (small) private school for years 8 to 12. My mother has worked at that same private school for close to 18 years.

Continued tomorrow …

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Oz Election (again)

I’m still not that interested in general, but these two bits looked interesting in their specifics:

  • Looking at Bryan Palmer’s “Day 6 report,” it seems that the betting markets have started moving sharply in favour of the Coalition. Labor is still being billed as the favourites, but it’s narrowing fast.

* The action is really at the top. The only difference between the Howard and Rudd tax cuts is that Rudd wouldn’t cut tax rates from 45% to 42% for those earning over $180,000. Assuming the same rate of wage growth that we’ve had over past years, only 1.4% of adults in 2010-11 will have an income in that range, while only 3% of families will have an income-earner in that range.

* This means that the richest 1% of families get 7% of the Howard tax cuts, but only 4% of the Rudd tax cuts. The richest 10% get 28% of the Howard tax cuts, but 25% of the Rudd tax cuts.

* The education credit is fairly evenly distributed across the income spectrum (as Labor pointed out on Friday, 2/3rds of families with children are eligible for it). So the Rudd package looks more even – but only a little – if you take account of it.

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Chaser and US newspapers

Andrew Leigh writes:

Which brings me to the Chaser, a program of such blokey irreverence it could only have been developed in Oz. For some odd reason, the Chaser lads have been copping flack over the past 24 hours for their APEC stunt. Watching stern-faced Mark Day on Today Tonight last night, you would have thought that the lads brought us within inches of armaggedon. Is it just me, or does anyone else feel a kind of cheeky pride at being part of a country where the public broadcaster pays comedians to dress up as Osama in a Canadian car, and attempt to meet George Bush?

It’s not just you. More power to ’em.

I do wonder about Andrew’s views on US newspapers, though:

When it comes to newspapers, theirs are unquestionably the best in the world – led by the New York Times, and followed at some distance by the WSJ, WaPo, LA Times, and others.

How does the FT not cut the mustard?

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Heuristics in academic economics

Andrew Leigh gives a heads-up on an upcoming conference at the ANU on ‘Tricks of the Argumentative Trade’. Shamelessly repeating Andrew’s quote:

‘Philosophical Heuristics’
Alan Hajek (Philosophy, RSSS, CASS, ANU)
Chess players typically benefit from mastering various heuristics: ‘castle early’, ‘avoid isolated pawns’, and so on. Indeed, most complex tasks have their own sets of heuristics. Doing philosophy well can be a very complex task; are there associated heuristics? I find the grandmasters of philosophy repeatedly using certain techniques, many of which can be easily learned and applied.
…
‘Argumentative Tricks in Politics and Journalism’
Morag Fraser (The Age)
Politicians and journalists use many argumentative and rhetorical techniques, some of their own devising, others thrust upon them. This talk will survey a field of examples from the media and politics – from the ways and means of factual communication to ‘spin’ – and take an occasional detour through historical precedents and prescriptions.

This is fascinating stuff and it syncs very well with some advice I got from a friend who is a recent economics post-doc: that theoretical economists seem to focus on truly mastering a few key models and then applying them to each topic that they come across. One of the key benefits is that by really knowing these models well, the theoreticians will already know how to prove all of the major propositions, which allows them to generate new papers very rapidly. My friend opined that the biggest names seemed to focus on just 4 or 5 different models, while the smaller names either didn’t focus on any particular model, or focused on just one or two.

It also matches my (extremely) limited exploration of economic literature. I’m currently avoiding study for my Development and Growth exam and sometimes it seems like one of the professors whose papers we regularly study only ever looks at a topic through a principal-agent model. We’ve had moral hazard put forward as explaining credit rationing, the success of microfinance, agricultural organisation, the maintenance of social networks, the optimal organisation for the provision of public goods in general, problems in health care, problems in education, and, and …

If, by some chance, any academic economists out there happen to read this: Do you see this in your readings? Do individual researchers (or more generally, specific universities) seem to always spit out the same model in different topics?

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Libertarianism, inequality and cultural homogeneity

Andrew Norton doesn’t think much of this article by Christine Wallace in the Griffith Review, in which she argues that the Coalition under Howard has instigated libertarian policies by stealth. He calls it “a dozen or so pages of ignorance and silliness,” citing this paragraph from page 8 in particular:

The libertarian logic is that, since personal freedom and the existence of free markets are inextricably entwined, and since – as Bork puts it – “vigorous” economies are vulnerable to being “enfeebled” by particular cultural practices, then the champions of personal freedom have a licence to police cultural practices – in the interests of freedom and economic vigour. Thus libertarians can reason that difference (for example, multiculturalism, homosexuality) must be eliminated so that the economy can function better – reasoning that is absurd, to say the least.

A commenter on Andrew’s blog also highlighted this bit on the previous page:

The central difference between the Howard Government and the Hawke/Keating Governments is that the Labor governments saw a crucial role for the public sector … especially in relation to issues of economic inequality; about which libertarians are unconcerned.

First a confession: I’ve not read more than two or three pages of Christine’s article. Still, if the blogosphere isn’t a place for partially informed comment, I don’t know what is. In the interests of fairness, though, I will disagree (slightly) once with Andrew and once with Christine …

In the paragraph that drew Andrew’s ire, Christine argues that the libertarian pursuit of free markets justifies cultural homogeneity. Andrew’s implicit criticism certainly seems to make sense: why should free markets and cultural heterogeneity be mutually exclusive? But it is worth noting that Christine may – at least to some extent – have an unpleasant point. For a market to operate efficiently requires trust between its participants. A market can certainly operate without trust if institutions are sufficiently advanced and corruption-free, but the enforcement costs they impose are a classic form of market failure, along with moral hazard and adverse selection. Even with good institutions, market efficiency is optimised by increasing trust. However, as Andrew Leigh has observed for Australia [here and here] and Robert Putnam has found for the USA [here], ethno-linguistic diversity breeds mistrust. In so far as they proxy for culture, Chrstine’s point at least partially stands.

Now back to Christine. She reckons that libertarians are unconcerned about inequality. It’s obviously a generalisation, but even in general, it’s misleading. While I’m sure that libertarians are not concerned about inequality per se, I’m equally sure that they are concerned with unwarranted inequality. Classic theory of the firm suggests that in perfectly competitive markets, a person’s wage will equal the value of their marginal product. Presuming (safely enough) that different occupations have different marginal products (so an engineer will contribute more to a firm’s profits than a cleaner), if people at the top of the pile are being paid more than their marginal product and people at the bottom are being paid less than theirs, a libertarian would oppose the excess inequality that resulted.