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James K

James is a government policy analyst, and lives in Wellington, New Zealand. His interests including wargaming, computer gaming (especially RPGs and strategy games), Dungeons & Dragons and scepticism. No part of any of his posts or comments should be construed as the position of any part of the New Zealand government, or indeed any agency he may be associated with.

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13 Responses

  1. Avatar bluntobject
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    says:

    Great post!

    I’d like to quibble about this part:

    The one area where government subsidy is warranted is 3.  If society is better off in some non-market way then the market will under-value the degree, and there’s a case for govenrment subsidy.

    …but no quibble comes to mind.  It feels like an excluded-middle argument to me (“your only choices are to undervalue the degree or provide government subsidy!”) but I can’t find a way to engage that.

    On the subject of “what good is an education to society?”: A friend of mine recently brought up the argument that, traditionally, the benefit of a classical education was that one could easily trace forward from the classics to contemporary society — maybe up until the late 19th or early 20th Century.  Reading Plato and Cicero and Shakespeare, for example, could allow you to extrapolate to Victorian politics.  Since then, the pace of change has accelerated to the point where a “neo-classical” canon which would allow its students to extrapolate all the way from Plato to the 2008 credit crisis would be too large to teach.  I’m not sure I entirely agree, but it seems like a reasonable start to an argument.

    As far as social goods in education go, I’d really like to see more people learn calculus.  The vast majority of the arguments I make that get misinterpreted can be framed as either derivatives or integrals of some utility function with respect to time.  They get interpreted as maxima of that utility function.  It drives me batshit insane.Report

    • Avatar Fear and Loathing in Georgetown in reply to bluntobject
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      says:

      Regarding:

      “What may surprise some of you is that 2 implies no need for a subsidy either, not even 2A.  This is where that point I asked you to remember earlier comes into play (you did remember to remember it, right?).  You see, if your actions benefit others, but they pay you for the privilege already then there’s no externality – the market has already taken care of it.  Doctors benefit society, but they get paid well because of that fact.”

      Uh, I think you are misunderstanding externality.  If we consider that the better health of their patients is valuable to their friends, family, and coworkers in ways that cannot be captured by the doctor in the form of remuneration, then there is a positive externality. Consequently, at least in this case, medical education should therefore be subsidized.  Moreover, some would argue that the additional income that accrues to all educated workers has spillover effect, .i.e. larger taxable base, is a positive externality.

      Personally, I think the scale of the positive externalities pale in comparison to the internalized increases in income, and so it doesn’t matter, 3 is the only actual case.  But your outright dismissal of 2A misunderstands externality.Report

      • I captured your objection here:

        But wait, you might say.  Some careers have value that is not adequately captured in the market, what about degrees that lead to those careers?  Well, while there might be a market failure there, but the failure in in the labour market, not the education market.  The subsidy should be for hiring people in the relevant field, not studying in the relevant field.

        Environmental economics is actually a speciality of mine, so I’m very familiar with the theories of externality.  The key is not just identifying the externality, but figuring out which market is generating it.Report

        • Avatar Fear and Loathing in Georgetown in reply to James K
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          says:

          Sorry, that makes sense.  I guess I was just looking at the education market in isolation.

          From a political perspective, however, it seems unlikely we’d be able to convince people to subsidize doctors’ salaries, given that they’re already higher than the median.  Much easier to portray the poor medical student as needing subsidy than a highly-paid cardiologist, but that’s separate from my initial objection about the economic question of externality.Report

        • Avatar trizzlor in reply to James K
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          says:

          The subsidy should be for hiring people in the relevant field, not studying in the relevant field.

          James, it’s not really clear to me why this is always the case. I can see why it is often best to target a market failure in the specific market that failure occurs in (presumably, the shorter the path between problem and solution the less unknown unknowns), but not why this is always best. However, I can also imagine a scenario where it’s wise to address a failure of market A by subsidizing market B because market B is directly related and much simpler than A.

          For example, let’s say the state wants to address a dearth of “high-tech jobs”. One option is to identify such jobs (a difficult task in itself), prioritize them based on some metric of “techiness” (even harder), subsidize, and then keep the bureaucracy up-to-date as technology and markets continue to shift over time. The other option is to subsidize engineering & technical degrees. Ideally, option 1 is more robust (for example, it covers people like Steve Jobs who drop out of college but make great contributions to the tech sector); but which is more practical?Report

          • Avatar James K in reply to trizzlor
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            says:

            I can see why it is often best to target a market failure in the specific market that failure occurs in (presumably, the shorter the path between problem and solution the less unknown unknowns), but not why this is always best.

            I’m open to the existence of exceptions, but I think my principle is good in the vast majority of cases.  The major reason is that education in a field doesn’t map neatly onto activity in that field.  There are people who do things outside their degree speciality, plus there are immigrants and potential immigrants who got their education outside the US.

            For example, let’s say the state wants to address a dearth of “high-tech jobs”. One option is to identify such jobs (a difficult task in itself), prioritize them based on some metric of “techiness” (even harder), subsidize, and then keep the bureaucracy up-to-date as technology and markets continue to shift over time. The other option is to subsidize engineering & technical degrees.

            If it’s hard to define high-tech jobs, what makes you think it would be easier to define the degrees that produce high-tech jobs?  And even it it was, just define high-tech jobs as the sort of jobs people with high-tech degrees get.Report

    • Avatar James K in reply to bluntobject
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      says:

      I’m with you on calculus, it can really come in handy.

      As for a modern liberal education, I suspect the world is simply too complicated today to be able to get a firm grasp on all of it.  That’s why I like Pinker’s idea, fixing some of the bugs in human cognition would help people navigate modern politics sensibly.Report

  2. Avatar Alan Scott
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    says:

    It can’t be easy to determine positive externalities when your starting point is specifically a list of the benefits to one of the parties in the educational transaction.  The whole point of externalities is that they’re about the way the transactions affect those who are not party to them.Report

  3. Good post James. In my experience education best fits this description thast you provided:

    <i>”Signalling: In this story a degree doesn’t teach you anything, instead university is like a long test.  Getting a degree is passing the test, proving that you have the combination of intelligence, conscientiousness and other employer-desirable traits that are necessary to acquire a degree.  Incidentally, this explanation best predicts a world in which employers care more about the fact you have a degree than what you majored in.”</i>

    I keep thinking of the Randy Pausch quote from his ‘Last Lecture’ :

    The brick walls are there for a reason. The brick walls are not there to keep us out; the brick walls are there to give us a chance to show how badly we want something. The brick walls are there to stop the people who don’t want it badly enough. They are there to stop the other people!

    I kind of look at college as a self-imposed brick wall.Report

  4. Avatar E.C. Gach
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    says:

    Great post James.  On number 3, I think for democratic societies there is a clear benefit that no econometric like GDP will explicitly measure.

    Whether higher education actually accomplishes these goals, it’s hard to imagine our democracy not benefitting from people actually understanding the historical relationship, limits, and duties associated with our three branches of government.  Anyone watching last night’s debate, with no prior knowledge of American politics, or institutions of government, would be completely mislead.

    It may just be pie in the sky, but I’d like to think that a more rigorous education in the historical and procedural, and to a lesser extent the philosophical, aspects of our civic life would lead to a better functioning political system.  Perhaps one could get that in high school, but eitherway, it needs to be done somewhere, and in the current set-up a stint in post-secondary education seems to be the only available spot.Report

  5. Avatar James Hanley
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    says:

    an argument Steven Pinker made that economics, evolutionary biology and statistics were the more important things to learn because they challenge some of the native human cognitive biases. 

    Basic probability statistics should be mandated by law for everyone by the age of 21 or they are expelled from the country.

    As to what education does, I think the reality in America today is signaling.  It ought to provide that amorphous unmeasurable benefit E.C. mentions, but I think for a very large number of students, perhaps a substantial majority, it does not.    College profs suffer through those who just want the credential for signaling purposes for the joy of working with those who view learning as a consumption good, something to be enjoyed for itself, and who are the ones who provide that unmeasurable social benefit if any such thing actually exists.Report

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