Arnold Kling  

The "literature" on returns to schooling

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Tyler Cowen writes,

The view that education is mostly about signaling is inconsistent with the established consensus on the returns to schooling and yet the writers at EconLog do not respond to this literature or, as far as I can tell, even acknowledge it.

I acknowledged the literature in my original post. The Card survey actually cites only a couple of natural experiments that are relevant to college. One is the paper that uses proximity to college as a natural experiment. That is, if you live in a college town, that is supposed to be uncorrelated with everything else other than your propensity to attend college. I call baloney sandwich on that one.

Another "classic" natural experiment is by Oreopolous, who uses the fact that some states have laws that require staying in school to different ages--16, or 17, or 18. It turns out that the average age at which students drop out in a state is not related to this variable. Nonetheless, he proceeds to use it as an instrument.

There is a "literature" on all sorts of bogus relationships. Consider epidemiology, for example.

I deeply resent the implication that skepticism about the returns to education is based on ignorance of the literature. Perhaps it is the believers who need to read more.

I say again: Run an actual experiment before you commit yourself to your beliefs.

[UPDATE: Arpit Gupta cites more literature. It turns out that David Card's survey is not the final word o the topic.]

Comments and Sharing

COMMENTS (5 to date)
Jack writes:

Some thoughts:
1) Until we do get experimental data, someone should look closely at the (small) group of very bright students who opted for low-cost higher education such as honors community colleges, instead of shelling out big bucks.

2) Do we know whether college helps you get a job that offers better non-monetary benefits? Some 50K jobs are fun, others stink.

3) Do the data on job remuneration include contribution toward health insurance and other perks?

odinbearded writes:

I guess I'm just biased, but I find it hard to take David Card seriously. His minimum wage study was so absurdly and obviously flawed that one should question the underlying methodology of anything with his name on it.

But then again, he does have a John Bates Clark medal.

Noah Yetter writes:

I fit Jack's #1 above. Having had the ability and opportunity to attend a "good" school, I instead chose to attend a very inexpensive local state college. I breezed through my classes and worked on the side, which taught me more actual marketable skills than all my classes put together. 7 years later, my career is on an above-average trajectory and my salary is more than satisfactory.

So I intuitively grasp the idea that the correlation we see between going to college (and also going to "better" colleges) is basically pure selection bias. We aren't educating ourselves in college, we are merely sorting ourselves apart from those who either cannot or choose not to jump through this hoop.

Hugh writes:

Posit a closed economy in which 40% of the jobs would be better done by a person with a degree and the remaining 60% can be done just as well by a person without a degree.

As the percentage of the population with a degree grows from, say, 10% towards 40% we can expect gains to accrue both to society and to individuals.

However, beyond the 40% mark I do not see further gains to society. If 60% of the population has a degree then 20% will feel frustrated whilst doing the job no better than a less qualified people could do.

The question thus becomes what percentage of US jobs really require a degree? Without that datapoint we are in the dark.

Joshua's Law writes:

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