Details of economic perceptions in US

24/03/2014 Comments Off on Details of economic perceptions in US

The Pew Research Centre reviewed some interesting results. They start off saying that there’s a puzzle:

One of the biggest political puzzles of 2014 is why the public remains so bearish about the economy, and in turn critical of Barack Obama’s stewardship of it, given clear signs that economic indicators are improving.

First, they have been finding for the last few presidential administrations that perceptions of the economy are linked to party affiliation. That trend still holds. What is curious is that Pew thinks it is curious. It makes perfect sense, really. If your guy is in power, you are probably going to be pleased with how he’s running the place. If the economy is strong, it’s because of him. If it’s weak, he’s doing the right thing to make it better. So, the partisan gap isn’t surprising.

Secondly, they report a gap in perceptions of personal finances that correlates with education:

For example, college grads now size up their finances roughly as well as they did before the Great Recession took a toll on their outlook. In contrast, personal financial assessments of the less well-educated Americans have not improved as the economy has recovered after the Great Recession.

But again, this roughly reflects what’s happened. People with college degrees have tended to do better, both before the recession and after. The assessment of the non-college graduates is probably realistic: more unemployment, longer unemployment, lower wages, etc.

I’d be really interested in similar surveying for New Zealand and Australia. UMR Research, for example, has the Mood of the Nation survey. The reports on their site don’t break down results by demographics, though.

Adjunctivitis — a choice, not a condition

10/02/2014 § 13 Comments

Universities in the United States run on adjunct faculty. Adjuncts are part-time, temporary, untenured faculty paid per course to teach. They have little time for research or administrative duties, and they are finding it hard.

Paid a few thousand dollars per course, they apparently now make up around half of US university faculty. There is concern about what it means for the quality of education and the future of universities. If teaching staff don’t have time to research, how do they stay current? If they can’t contribute to administration, how will all the curriculum and ethics committees get their work done?

The neologism ‘adjunctivitis’ is revealing. The suffix ‘-itis’ suggests a medical condition that has befallen the faculty — think appendicitis, bronchitis, etc. But what we have here is a choice. These faculty haven’t suddenly come down with adjunctivitis. They have been building towards it for years, making a series of choices, continuing on this particular path despite the difficulties.

It is a hard choice, yes, but a choice nonetheless. Maybe they feel driven to teach. Maybe they really like their specific area of research. Maybe they like where they live, or their partners are settled into their own jobs. But let’s not forget that these are people with options. They are clever people with good work ethics who know how to communicate. They are choosing to continue being adjunct faculty because they feel it is better than the alternatives.

Hey, sorry, it’s not my problem if you can’t land your dream job. Wouldn’t it be lovely to be Prof Reg Chronotis — a little office, a little sinecure, no teaching load? But such positions are works of fiction.

What if a bunch of them said no? What if they just decided, y’know what, selling real estate or writing computer code or being in middle management is less stress and more money? I don’t know what would happen, but it would be interesting to find out. A new cohort of adjuncts might appear, ready to do the same work at the same pay. Or, universities might have to do something about pay and conditions.

Universities are under pressure to offer students luxury facilities at reasonable prices (air conditioning?! private bathrooms?! hah!). Universities are also affected by governments cutting spending:

In 1980, states provided 46 percent of the operating support for public colleges and universities, according to the Association of Public and Land Grant Universities. By 2005, average support had fallen to 27 percent.

Something’s got to give. In this case, it’s the cost of producing the lectures and assessments. A big variable cost with them is the teaching staff. If there’s no countervailing pressure from people, oh I don’t know, refusing to work for peanuts, then that’s where the universities will cut the costs.

Finally, there’s a revealed preference here about the attributes in the bundled good ‘university education’. This adjunct trend has been going on for years, and the complaints about impacts on teaching quality are nothing new. And yet, people keep shelling out more money for poorer teaching. Why? It does suggest that going to university is about getting that certification, or building networks, or being socialised, or buying the name brand if you can. People — students, parents, employers — seem less worried about the quality of the education.

Until they do — can I interest you in a little fixer-upper bungalow with nice harbour views?

Education policy: solving the wrong problem

24/01/2014 § 1 Comment

The big political news yesterday was the announcement by National of a new education policy. It will put in place a few experts — super-principals and super-teachers — to oversee and guide schools and regular principals and teachers. And, it will pay them a premium.

The usual economic models I use don’t seem to apply here. This is more about management, for which I have no ready models. If I fall back on thinking about incentives, I don’t see anything in here that changes the incentives for teachers. In fact, it creates incentives for the incoming managers to (a) overstate the deficiencies of the existing situation, and (b) institute new policies and procedures so as to be seen to be doing something. But I don’t have a great economic insight for you, sorry.

I do know a little about the education system, though, and it seems like this policy is solving the wrong problem, or a problem that does not exist. Education in New Zealand is generally good. Overall, students fare well on standardised exams and international rankings. They are able to go to overseas universities and do well. On average and in the main, education is on par with the rest of the developed world.

Whether warehousing kids for 13 years is actually good for their development as creative human beings, that’s another argument, but we’ll skip it here.

Despite the good average performance, the country has two problems:

  • the long, fat tail of low performance, which correlates with race and poverty
  • lack of public resources for top students, to help them achieve their potentials.

The first problem is that some kids in some communities are disadvantaged in all kinds of ways, and that shows up in school results. Improving their performance is partly about the schools themselves, and partly about helping the communities and families overcome the disadvantages. It also involves some reflection on why the disadvantage is there and continues, which is a massive social conversation that the inequality campaigners are attempting to have (but, in my opinion, going about the wrong way).

The second problem comes out of the drive for standards. If teachers are given incentives to lift kids to some arbitrary level, they will work towards it. Any kids who naturally get there will be ignored, because teachers aren’t paid to help them excel. This imposes costs on the families and communities, who have to pay for all the extracurricular stuff that helps the kids excel, or move them to the expensive schools that offer more options. It also creates losses for individuals and societies, who aren’t as creative and inventive as they could have been.

The new policy addresses neither problem. Creating a national system of administrators and consultants (which is what the policy seems to do) isn’t necessary. We need targeted intervention to help the poorest performing kids, and we need a shift in focus and policy to create incentives for teachers to nurture the best and brightest.

Science stumble with young students

01/09/2013 Comments Off on Science stumble with young students

The science sector in New Zealand wants to get more people — particular young people — interested in science. It believes that science careers get short shrift when students are planning their education. It also wants to encourage more girls into STEM subjects. Don’t take my word for it. There’s a 2008 Science Maniesto from the Royal Society explaining all this.

I’m certainly in favour of my daughters having interesting, rewarding jobs. If a science career provides that, great. There’s been some science talent in the family, so it’s a possibility.

We’ve been supporting what science is available for primary and intermediate girls. Recently, one daughter participated in the NIWA Wellington Science Fair. From our experience, the event didn’t help get kids fired up for science.

The most important thing to realise is that these kids have choices. Sure, science is one possibility, but so are medicine, law, finance and more. Science has to be appealing. So let’s compare:

  • My daughter’s division had over 50 entries. Only four kids won prizes. Most of those kids won more than one prize. By comparision, a singing competition might have four prizes in a division with maybe a dozen entries. One of their maths competitions has five prizes for the 30 or so schools who participate.
  • There was no feedback. The kids have no idea what they did well and where they fell down. They don’t know what they could do better. By contrast, performance judges fill out sheets for each performer. They typically give positive and critical comments, which helps kids both understand their mark on the day and identify things to improve.
  • The best we can figure is that the judges liked some combination of science, application and presentation. But there’s no way to gauge how much those things contribute to the rankings. On the other hand, a maths competition is judged in terms of right and wrong answers. If your team gets it right, you get the point. The kids are competing against the maths problems as much as they are competing against each other. The ICAS and Australian Mathematics Competitions are similarly based on getting the answers right, not tickling the judges’ fancy.
  • My daughter’s girls’ school had one of the largest contingents from any school in her division. They won nothing. Nada, zippo, zilch. We can talk about other schools having more experience with the competition and larger schools having more resources for extra-curricular activities and the rest. But none of those explanations changes the experience this girls’ school had of sending a big group to a city-wide event and coming back empty-handed.

What my daughter and her classmates experienced seemed to be a subjective, secretive, winner-take-all tournament. Now, obviously, these folks can run any kind of competition they want. They just shouldn’t be surprised when these girls don’t rush back to do it again, and find something better to do with their time.

Five box-tops, four bottle-bottoms

26/07/2013 Comments Off on Five box-tops, four bottle-bottoms

I received a solicitation by email the other day. No, not that kind — goodness, this is a family show. It was an invitation from the International Centre for Parliamentary Studies to do a course for a Professional Certificate in Foundations of Economic Development.

So who are these people?

The International Centre for Parliamentary Studies is a research institution of the United Nations Public Administration Network (UNPAN), and also works in partnership with the United Nations Development Programme (UNDP) and the Association of European Election Officials (ACEEEO).

Apparently, an official, above-board sort of place. And what are they offering?

Examine the myriad of issues which determine prospects for economic development and develop comprehensive and effective plans for the delivery of measurable economic improvements to citizens’ lives.

Complex economic systems, including micro-entrepreneurs and shadow economies, require management and leadership with clarity and cohesion, encompassing understandings of multisectoral linkages, sector planning and development strategies. Participants will work with leading specialists to analyse this broad range of issues and develop their understanding and construction of holistic conceptions of the theory, policy and practice of promoting economic development.

Wow — sounds cool! Lots of interesting material, grappling with the complexities of modern mixed economies, ‘leading specialists’. How long will it take me to acquire this complex understanding?

Monday 2nd – Friday 6th December 2013

Yeah, that’s right, you can be an expert in one week. Sigh.

Here’s my bias. I’ve been studying and researching economic development in various forms for coughtwentyfiveyearscough. It’s still a mystery to me. We kind of understand it, and we know what some of the big drivers are, and we have some idea of what not to do. But new ideas come up, and things don’t happen the way you think they should, and whaddaya-know the economy changes over time. If anything should give us economists some humility, it’s New Zealand’s experience. Yeah, sure, tyranny of distance blah blah lack of scale yadda yadda. But in terms of the things we can influence — policy settings and economic incentives — New Zealand does pretty well. And yet, it just doesn’t quite perform.

But some poncy bureaucrats are going to attend this course and suddenly believe they are Professionals (!!) in Economic Development. Then they are going to take the half-remembered version of the summary of the synopsis and inflict it on some unsuspecting jurisdiction. By the time it doesn’t work, they will have moved on to the next job requiring a Professional Certificate in Acquiring Professional Certification.

So, everyone, join in: ‘It takes five box-tops, four bottle-bottoms, three coupons,….’

In praise of liberal arts

16/07/2013 § 2 Comments

A working paper on private returns to tertiary education I co-authored has been published in the Treasury series (WP 13/10). I didn’t do all the fiddly bits, but did help with constructing the logic and the story behind what we think was going on. In a nutshell, NZ ranks poorly in the OECD research on returns to education. Around half of the difference between local returns and the OECD average can be traced to measurement issues (comparing apples with applesauce), while the other half is actually poor returns. The overwhelming reason for the poor returns is the low wage premium to being educated.

One of the issues we examined was ‘mismatch’. With the NZ data, there wasn’t much we could do. There just isn’t enough information on what happens to students after they leave tertiary education. I know that the pay-off to a liberal arts education for me was a long time coming — it isn’t enough to follow people for two years or five years. To cite our conclusion:

Finally, mismatches between employment and field of study and/or qualification level are often cited as a possible driver of low returns. There is little evidence that observed mismatches are in fact mismatches at all. However, if persistent mismatching is going on due to policy or market failures, this could be having a significant impact on returns. Whether that is the case or not is an open question.

Mismatch actually refers to two separate things. One is qualification mismatch — people getting Bachelor’s degrees when employers really want trade qualifications. The second is subject-matter mismatch — university students studying French literature when employers want computer science grads.

The Chronicle of Higher Education (CHE — did they choose that acronym on purpose?) recently published some pieces on mismatch. One looked at what employers wanted out of applicants’ educational experiences, and ended up muddling the two kinds of mismatch. However, when it did talk about subject matter as opposed to level of qualification, it cited one person as complaining:

it’s fundamental abilities that he says recent graduates lack, like how to analyze large amounts of data or construct a cogent argument. “It’s not a matter of technical skill,” he says, “but of knowing how to think.”

‘How to think’ — that’s pretty much the definition of what a liberal arts education is supposed to provide.

(Importantly, though, the survey company approached 50,000 firms and had only 704 responses, so we should be careful about reading too much into the results. But maybe I’m just analysing data to construct an argument.)

Fortunately, as the CHE also tells us, students are in fact choosing liberal arts degrees:

There’s only one problem with those insistent accounts of the decline of the humanities in undergraduate education: They are wrong. Factually, stubbornly, determinedly wrong.

I have been trying to point this out for years, using “numbers” and “arithmetic,” but it appears that the decline in humanities enrollments is universally acknowledged. Everyone simply knows that it has happened….

That piece is a welcome correction to the record. I had heard about the decline so much I believed it myself — turns out it isn’t true.

Variability in returns to education

10/05/2013 § 1 Comment

The headline in the LA Times was ‘College is a bad financial bet for some, study says’. The story focused on the cases in which students had a negative return on investing in higher education:

A surprising 14% of high-school graduates earn at least as much as people with bachelor’s degrees, and 17% of those with bachelor’s degrees outearn compatriots with professional degrees, the authors found.

The study in question is here, a Brookings Institutions report about the variability of returns to education.

The main thing I wanted to point out was the framing of these numbers. Research has shown that the way that percentages are presented changes how people react to them. Is it a 20% chance of failure or 80% chance of success? Is it a 1% probability of damage or a 1-in-a-hundred chance? It matters.

So let’s flip it around. Are you surprised that 86% of high school graduates earn less than people with bachelor’s degrees? How about that 83% of people with bachelor’s degrees earn less than graduates with professional degrees? If you were playing the percentages, would those results encourage you to get a degree?

What the authors are telling us is that earnings by degree have a distribution around some mean. There is some distance between the means, and the overlap of the distributions isn’t all that large (15%-ish). I haven’t gone through the report, but the results would be affected by whether they are doing a sort of t-test of the two distributions, or doing something like analysing joint distributions of two random variables.

Does this mean we are sending too many people to university? I’d suggest we don’t have enough information. If we think of it as a comparison of two distributions, what would we be trying to do? Are we trying to:

  1. create enough distance between the means so that the overlap is small? But why should we encourage a larger premium for education when on average the benefit-cost ratio of education is already around 5?
  2. shrink the left-hand tail of the distribution for the more-highly educated? But how do we reliably identify these students, and should we give up on majors or degrees that don’t have a high enough return on investment?
  3. do something with the right-hand tail of the high school graduate distribution? But what do we do with them? They have done well as high school graduates — it doesn’t then logically follow that they should have more education.

I don’t see that there’s necessarily a problem. The fact that a small-ish percentage of people don’t get much from a university education means that we are casting the net wide enough to bring in most of the people who potentially would. The fact that some high-school graduates can still make a good living shows that there are still opportunities for all kinds of people, not just top STEM graduates from top schools.

Bets don’t always pay off; investments sometimes fail. But if I were playing blackjack and winning 86% of the time, I’d be at the table all night.

Metaphor of student as customer

01/05/2013 § 1 Comment

A colleague sent me a link to Professor Scott Galloway’s advice to a student who dared take a metaphor seriously:

When the student arrived an hour late to the professor’s brand management class, Galloway told him to leave. Later the student emailed Galloway, explaining that he was shopping around for classes, which is why he was late: “It was more probable that my tardiness was due to my desire to sample different classes rather than sheer complacency.”

The student, it seems, really did believe he was customer of the university. He was shopping around, trying to find the product that best met his needs. And why shouldn’t he think that? The metaphor has been around for a long time, and the more students are asked to contribute to the cost of their education, the greater currency it has. I came across this article in the Times Higher Education, from 1999:

Universities face a wave of student litigation because of a failure to grasp their changing contractual relationship with fee-paying undergraduates, an academic lawyer has said.

Mr Birtwistle, a principal lecturer, found that only a minority of universities surveyed understood the potential impact of the introduction of fees. “There can be no doubt now that students hold a consumer contract with their university,” he said. Mr Birtwistle said that now students pay their fees directly means they are, in legal terms, buying a service. They are therefore entitled to private law redress for breaches of contract.

‘Students are our customers’ goes from being a business-school metaphor to being a statement of civil law. Students who are dissatisfied have therefore appealed to the courts for redress — for not providing promised support, for a poor grade (the case failed), for not getting a job, for failing to provide courses in a timely fashion [can’t find a link].

Looking through the various cases, it is clear that courts do not want to meddle with academic issues. They tend to side with universities, who defend themselves by saying they are upholding academic rigour. Interesting, Prof Galloway did not appeal to academic rigour, or even professorial authority. He appealed essentially to accepted standards of behaviour.

Now, we could view the NYU episode as an example of the teaching/learning that can happen at a university beyond the subject matter. The professor is trying to teach the student how to behave in, as it were, polite society. But that doesn’t break the metaphor. It just means that the lessons the student is buying are more than the lectures and slides. They are behaviour lessons — the so-called ‘soft’ employment skills — that make a difference to how people get along in the workplace.

Once again, we get back to the purpose of a university education. Is it to produce graduates who know how to behave? Is it to teach them specific areas of knowledge? To get them jobs? It’s probably a bit of all those things. But that also gives universities a lot of ways they can fail their students, and a lot of potential grievances to be redressed.

Mass-produced education

12/04/2013 § 2 Comments

MOOCs — Massive open online courses — are the latest Next Big Thing in education. Technology has made it cheap to reproduce and transmit information. The hope is that it can spread education far and wide.

The discussion of MOOCs reminds me of other technology discussions. Back in the early days of Web commercialisation, there was a lot of jostling and experimentation to try to figure out how to use the Web and make money from it. Some models boomed, some failed, and some limped. MOOCs look like the same sort of process — trying to figure out how to make a profitable mass education business model.

They also remind me of MP3. The analogue proponents say that compressed digital music doesn’t provide the quality that vinyl can. Listening to poor-quality songs from my smartphone, I know they are right. But then, I can’t carry around 1,568 songs on vinyl in my pocket. The criticism that MOOCs are providing poorer quality education — which is likely to be accurate — ignores that there are other considerations. Some people in some situations are willing to trade quality for convenience.

The criticisms of MOOCs seem to revolve around their commercial focus, which is just the latest fight over commercialisation of universities. This Lawyers Guns and Money post on US and UK universities discusses MOOCs  as part of a larger discussion of

the commercialisation of academia and the erosion of academic freedom [which] are tightly interwoven.

In particular, critics are concerned about profiteering by the course providers and the rise of superprofessors —  seeing MOOCs as ways to stroke the egos of people who are already successful while creating profits only for the companies involved.

These courses are revealing an important split in the role of universities — the production of new knowledge, which is expensive and time-consuming, and the dissemination of knowledge, which needn’t be. And that suggests the possibility of greater division of labour, which has historically made things less expensive and more available. These changes don’t tend to be (are never?) unequivocally good (or Pareto improving). This was Rousseau’s critique, as it was Marcuse’s, but people continue to buy the newer, cheaper stuff.

I am in the middle of some lecturing. I have two sections of about 250-300 students each. I pace about at the front of the lecture halls — purpose-built to have that many students — and talk them through basic statistics. I get the occasional comment or chuckle as feedback, but I’m not interacting with the students in any meaningful way. I could be performing in front of 300 or 3,000. They could be watching me in person or on-line.

These large lecture halls show that universities already recognise the efficiencies to be had in transmitting information. Universities are already mass-producing education, and students’ experiences are already inferior to mine of 25 years ago. MOOCs are not just a new technology that breaks with the past; they are also a continuation of it.

Will students learn?

24/01/2013 § 5 Comments

A couple of days ago, the Government launched a new website that allows students to compare potential earnings from different university degrees. The Government said it would be a great source of information for students. Student representatives replied that it didn’t tell them anything new.

A word about methodology — this data was made possible by the new types of data and ways of handling it that have been developed over the last few years. By linking actual earnings data from the tax department with tertiary qualifications data, researchers have been able to determine how much students earn after graduation. This data is gold for research on the impacts of tertiary education.

The website allows you to make pairwise comparisons between different levels of study and degree options. Thus, you can find out that earning a Bachelor’s in a foreign language (that was me) makes you twice as likely to be on a benefit a year after graduation than earning an accountancy degree (that was my brother).

In one sense, the students are right. We already knew this. Many studies have shown which degrees earn the most and the least. I’m currently working with a couple of people on a report on returns to tertiary education. It’s been shown that agriculture or humanities degrees have returns between 40% and 90% below average (Psacharopoulos, 2009; Machin & McNally, 2007).

Lucky me, I have both.

On the other hand, the website is a great tool. It makes the information much more available (have you read Psacharopoulos (2009)?) and dynamic and fun. It also makes it more precise. It isn’t just, oh, yeah, those accountancy students will earn more. Students can see that it’s five, ten, fifteen grand a year every year for the rest of their lives.

Will students change what they study? Will they learn something from the new information? That’s the great thing about this data — we will be able to find out. In five years’ time, we can look back and see whether the composition of degrees in New Zealand has changed.

Also, that research will tell us something else: how much study is preparation for the workforce versus self-improvement or simply consumption. The more students see study as a path to higher earnings, the more the new information should change behaviour. Maybe it won’t change behaviour after all; maybe students already know this stuff; maybe students are already doing what they think best.

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