More wasted money

The House recently passed a party line vote to spend more money on education and Medicaid. The $10 billion dollars to the states comes with many strings attached, notably that they do not get the money if they decided to cut spending on education as a share of total revenues. I’ve touched on the irrelevance of medical spending past a certain level before, so let’s look at the effectiveness of education spending.

Source: “Does Spending More on Education Improve Academic Achievement?” by Dan Lips, Shanea Watkins and John Fleming

Of course, the chart is somewhat misleading.  Education scores are range bound while spending is not, but it is notable that they often seem to be going in opposite directions*. 

Using additional cross country data from NationMaster, we see that government spending on education beyond a certain point doesn’t seem help very much anywhere in the world:


Total education spending as a percent of GDP isn’t any more correlated with scientific literacy, but at least the correlation isn’t negative.


So the government may be wasting money here, which just gives us more evidence that  α is very high.

*At younger ages there is some evidence of improved math scores, but these improvements are negligible by age 17. Click through the article for more charts.

What Caused the Slacking?

Tyler Cowen and Arnold Kling both point a paper by Philip Babcock and Mindy Marks on the declining number of hours students spend studying per week.

After accounting for framing, we observe statistically significant declines in study time of about 8 hours per week between 1961 and 1981, about 2 hours per week between 1988 and 2004, and about 10 hours per week between 1961 and 2003.

The out of class weekly study time for full time college students decreased from 24 hours in 1961 to 14 hours in 2003. The surprising thing about this study is that the bulk of the decline occurred between 1961 and 1981 instead of between 1988 and 2004 during the time when personal computers became really useful for the majority students.

The paper is pretty thorough and finds the decreased study time occurring across different majors and at all prestige levels. However, two possible theories for the change in study habits are incorrectly dismissed: increased female student population and more students working part time to pay for college. These potential causes are dismissed because female students study more than male students, and the hours spent studying by full time students also decreased.  The key aspect here is that both of these phenomena give students the ability to study less and still maintain their relative ranking within the college.  The top quartile student only has to study a little more than his classmates. If the median students now have better things to do than study (dating, a necessary part time job) then the top quartile students can still easily retain their class ranking despite a reduced study time. 

Another explanation is just that the culture of the baby-boomers was not that interested in studying, and the trend was self reinforcing for the relative ranking reason mentioned above.

On a tangential note, if students are graduating while working 10 hours less a week then catching up to the knowledge frontier probably isn't a good explanation of why younger scientists are less productive.

Young Academic Creativity

Max Planck said “Science advances one funeral at a time.” He was implying that older scientists are too tied to the status quo to accept evidence challenging the view of the world that they helped shape. This means that younger scientists are often the key to advancing the frontier of knowledge, so I was very interested in the Core Economics blog post on youth creativity along with their links to an interesting WSJ journal article on the declining scientific productivity of younger scientists and a related paper on science policy by Benjamin F. Jones. 

The WSJ article highlights the inverted U of productivity, where a person’s creative productivity peaks sometime between the ages of 25 and 50.  For physicists, mathematicians and poets, the age of peak productivity has historically been closer to 25 than 50 as fluid intelligence peaks earlier.  For biologists, historians, philosophers and novelists, the peak age may be closer to 50 than 25, as crystallized intelligence is more important than fluid intelligence in these fields.  The current NIH grant system tends to give grant money to established scientists, which some worry means that many scientists are getting money only when they above the historic age of peak productivity causing the relative productivity of younger scientists to drop. 

In the paper, “As Science Evolves, How can Science Policy?” Benjamin Jones tries to paint these changes as a natural reaction to the changing state of the process of science and thus as nothing to be alarmed about. His main point is that a scientific advancement pushes forward the boundaries of knowledge, the natural result is for scientists to be more productive later in life and to be more productive in teams as each member can contribute their specialized knowledge. He is not worried as much about whether or not the grey ceiling and bureaucracy in academia is preventing progress, but sees progress by on average older people and teams as confirmation that the frontier of knowledge is harder to reach.

It is very possible that the expanding frontier of knowledge is making science more difficult for younger people, but the knowledge barrier might not be scientific but social and political.  The evidence presented in the paper can be used to suggest that the bureaucratic obstacles are getting more difficult to navigate. The first place the paper looked at was the increasing age of noble prize winning scientists’ first great achievement and inventors’ first parents.  Both of these have increased since 1900.  Both of these may be due to an increased cost in money rather than time to get to the frontier of knowledge.  Advances in the frontier often put specialized tools farther outside the reach of amateurs. More recently, it may be due to the lack of personal control many scientists who depend on grants have over their research until they get their own grants and labs at a later age.

The paper also focused on evidence of the increased effectiveness of teamwork. Rather than a sign of scientific specialization, increased teamwork can be a sign that certain people are specializing in some aspect of the bureaucratic process. (The paper also shows that between 1975 and 1993, individuals working on teams of patent applications are more likely to jump fields in patent applications than solo inventors while in 1975 they were both equally likely to jump fields. This evidence could suggest an increased role of specialization, or it could suggest that on the margin would-be patent trolls have found it much easier to monetize if they work in teams instead of individually.)

Jones also found that papers published by teams have a higher probability of a large amount of citations.  A hypothetical example of non-scientific specialization could work as follows: Maybe one member is really good at getting grant money, while the other is the one with the ideas and the experimentation process (the one who might otherwise be a solo author), another is good at writing up the paper in the proper form and another is good at getting people interested in continuing their line of inquiry, thus earning citations and recognition for their work. If citations are often a tit for tat social game that academics must learn to master and that is improved by having more connections, which is another barrier in the frontier of knowledge that is relatively unrelated to the accumulated advances science.  This team advantage has reversed the solo advantage in a number of fields since the 1950’s, so these fields may be evidence that once fertile fields have become more and more politicized.

There is definitely something going on in the changing process of science, but to focus solely on the frontier problem as the explanation for recent changes papers over important structural problems. Treating recent changes as the new status quo and implementing policies with goals such as encouraging more teamwork, like the paper suggests, may make it even harder for the scientist to out compete the bureaucrat... in science.

Time to go back to school?

So you are a confused college student who is having a hard time finding a job in the aftermath of the great economic recession. Should you go back to school for your Ph.D. in order to hide out until the job market gets better?  Thomas H Benton has an interesting article addressing this question for those interested in the humanities Ph.D.'s but who aren't sure that they want to go into academia.
The ranks of new Ph.D.'s and adjuncts these days are mainly composed of people from below the upper-middle class: people who believe from infancy that more education equals more opportunity. They see the professions as a path to security and status.

Again and again, the people who wrote to me said things like "Nobody told me" and "Now what do I do?" "Everybody keeps saying my doctorate gives me all kinds of transferable skills, but I can't get a second interview, even outside of academe." "What's wrong with me?"

Well, the job markets sees a few things wrong with the typical Ph.D. student compared to someone who has similar levels of IQ, openness and conscientiousness but managed to avoid getting sidetracked in graduate school.

1. They are signaling that they are not the type of person who wants to deal with the real world outside of the bubble of academia.

2. For graduate students in technical fields, they are demonstrating that they prefer prestige status over monetary opportunities. There is also the potential for status clashes with superiors in the workplace.

3. In younger Ph.D. students, the Ph.D. track is often chosen because no other track was readily apparent.  Choosing this track only to go into the workforce later on suggests that they don't really think about how the world works beyond one or two steps.

4. They spent all of their time learning how to become a professor, gave up on that, and are now competing with peers who have put the time into figuring out how to create value in the market. 

The Ph.D. drop out is much better positioned than the student who delays entering the real world by finishing their thesis. However, there are some positions such as in biochemistry where in order to have influence in the real world an advanced degree is more beneficial than harmful.

Tyler Cowen has some additional thoughts on why people get Ph.D's in the humanities.

Analyzing a Politically Correct Education/Economic Study

John Taylor’s blog Economics One points to an interesting OECD paperThe High Cost of Low Educational Performance, by Prof. Rick Hanushek and Prof. Ludger Woessmann.  They make projections based on the relationship between performance on international math and science PISA tests and economic growth.

The estimated coefficient on cognitive skills implies that an increase of one standard deviation in performance (i.e., 100 on the PISA scale) would yield an annual growth rate that is 1.74 percentage points higher.              

Their analysis leads to the following politically correct chart:

Except in the case of the lowest performing countries, this approach is very misguided.  While allowing a sizable fraction to achieve basic literacy is necessary, the marginal worker in an advanced economy isn’t going to help much once the network effect of a literate society is established.  By aiming to put a minimum under the PISA scores, they are changing the distribution of the variable that was found to be significant in the past. Scientific and technological progress will more often come from the inventions created by the high achievers on the far right of the distribution than the more sizable group on the left side, so just cutting off the leftward distribution changes the nature of what the PISA test scores were measuring in the first place.  Even if the share of literate population was more significant in their regression than the share of high achieving students*, the relationship between literate students and high achievers can be assumed to be relatively constant up until programs such as No Child Left Behind in the US encourage schools to favor creating the former over the latter.

The following charts from a BOE speech on Inflation and the Service Sector by Timothy Besley highlights what is wrong with trying to increase only the minimum PISA performance to raise economic growth. 

This is a chart of components of the UK service sector.  While the UK’s economy is geared more towards high end services than high end manufacturing, the principle remains the same. The low end services remain a sizable part of the economy. 

The employees at the bottom rung of the service sector are low productivity due to the nature of their industry. More investment in education the left side of the distribution might cut off some of the really bad results, but it will not result in a vastly more productive economy.  Focusing on manipulating the education scores upwards by targeting what looks like the lowest hanging fruit changes the nature of the underlying relationship.  Considering that in the US there is already an order of magnitude more money spent on special needs programs than on gifted programs, the low hanging fruit in education might just be on helping skew the educational score distribution further to the right.



* These regressions can be skewed by some cultures that excel at test scores at the expense of creativity or by looking at too broad a measure of high achieving students to accurately identify the countries with the highest proportion of superstar students. The really high achieving may also be more likely to change their country of residence, benefiting the countries that attract their human capital instead of the countries that produce them in the first place.

Major Choices

When thinking about the future of the country, many people say “Think of the children!” but fewer people wonder what those children are thinking.  Looking at the chosen majors of today’s graduates is one way to measure what America’s children are thinking.  Even better, their revealed preference is probably more trustworthy than surveys.

Source: US Department of Education, National Center for Education Statistics, Digest of Education Statistics

The biggest thing that stands out is the increased focus on the practical.

  1. Business majors are up while social science and history majors are down.
  2. Engineering technology, which prepares graduates for a job right out of school, is up while engineering majors are down. 
  3. Students have decided that they need majors for jobs that used to be done by high school graduates as they are getting more degrees in transportation, securities and protective services as well as materials moving as well as parks, recreation, leisure and fitness studies. 
  4. Education majors have shrunk, but this is probably due to cultural changes that allow women more choices when it comes to their field of study. 
  5. Students also see the increased demand for health services in their future and have gone into biology, psychology and health professions and related clinical sciences at increasing rates. 
  6. Computer science majors have increased with the emergence of personal computers. It should be noted that this major actually peaked at 4.5% of college graduates in 2003-04 with the class of students who picked their major at the height of the internet bubble.  The recent drop off in CS of 1.5% of all students choosing other majors almost exactly matches the additional 1.4% of college students choosing to major in health professions and related clinical sciences between the 2003-04 year and the 2006-07 year.

For those worried about a decline in the quantitative focus of students, the shortfall of quantitative majors is only 1.25% of the student population compared to 1970, and this number completely disappears if it is assumed that half the double majors are doing something quantitative or a fraction of the business majors are learning about statistics.  Of course, the college graduate situation only looks good when comparing the United States to a past version of the United States.  What is worrisome about the education picture to many people is the declining relative position of the United States compared to other counties and that will be covered in a future post.