A new book by Bryan Caplan. It’s the signalling case.
In a paper, Reto Föllmi and Isabel Martínez document trends in income and wealth inequality in Switzerland over the last 100 years.
Daniel Hug reports in the NZZaS (figures below taken from NZZaS).
Data (World Wealth and Income Database, based on tax records).
- Income inequality has been rather stable and is modest …
- … although social mobility as reflected in educational attainment is low.
- Income inequality at the very top has increased.
- The top 1% of income recipients earn at least CHF 300 000 annually (net income before tax), the top 0.01% at least CHF 4 million.
- Wealth is distributed much more unequally. The top 1% own roughly 40%, slightly more than in the United States and twice as much as in France and the UK.
- The wealth distribution is more equal if retirement savings in the second and third pillar are accounted for. PAYG funded pensions (first pillar) also contribute towards reducing inequality after taxes and transfers, much more so than taxes.
In a CEPR Discussion Paper, Sascha Becker, Thiemo Fetzer, and Dennis Novy argue that education and income mainly explain voting outcomes. In the abstract of their paper, the authors write:
We find that exposure to the EU in terms of immigration and trade provides relatively little explanatory power for the referendum vote. Instead, … fundamental characteristics of the voting population were key drivers of the Vote Leave share, in particular their education profiles, their historical dependence on manufacturing employment as well as low income and high unemployment. … within cities, we find that areas with deprivation in terms of education, income and employment were more likely to vote Leave.
The Local reports that in order to cut costs, Denmark’s parliament passed a bill in December that will lead to the imposition of an “education cap.”
The bill restricts individuals who already have a higher education degree from pursuing a degree in another field at the same or a lower level.
Their advice for a dream job: Look for
work you’re good at,
work that helps others,
supportive conditions: engaging work that lets you enter a state of flow; supportive colleagues; lack of major negatives like unfair pay; and work that fits your personal life.
The book discusses strategies to build a career plan, and a career. The main text closes with this summary:
Explore to find the best options, rather than “going with your gut” or narrowing down too early. Make this your key focus until you become more confident about the best options.
Take the best opportunities to invest in your career capital to become as badass as you can be. Especially look for career capital that’s flexible when you’re uncertain.
Help others by focusing on the most pressing social problems rather than those you stumble into – those that are big in scale, neglected and solvable. To make the largest contribution to those problems, consider earning to give, research and advocacy, as well as direct work.
Keep adapting your plan to find the best personal fit. Rather than expect to discover your “passion” right away, think like a scientist testing a hypothesis.
And work with a community.
In an appendix, the authors advise (potential) undergraduates to
aim for the most fundamental, quantitative option you can do i.e. one of these in the following order: mathematics, economics, computer science, physics, engineering, political science / chemistry / biology,
focus on developing communication skills in philosophy, history or English.
The best choice is a combination. There is high demand for people who can understand quantitative topics and communicate clearly.
Appendix 8 contains useful career review summaries with “facts on fit” and “next steps” (see also this link for updates). For example, the authors advise that
[a]n economics PhD is one of the most attractive graduate programs: if you get through, you have a high chance of landing a good research job in academia or policy – promising areas for social impact – and you have backup options in the corporate sector since the skills you learn are in demand (unlike many PhD programs). You should especially consider an economics PhD if you want to go into research roles, are good at math (i.e. quantitative GRE score above 165) and have a proven interest in economics research.
But they warn that an Economics PhD takes a long time and
[d]oing highly open‐ended research provides little feedback which can be demotivating.
A final appendix discusses areas where people who want to help others possibly can have a large impact. As very promising areas, the authors identify
- Climate change (extreme risks),
- Factory farming,
- Global priorities research,
- Health in poor countries,
- Land use reform,
- Nuclear security,
- Risks posed by artificial intelligence,
- Smoking in the developing world, as well as,
- Promoting effective altruism (the movement related to the book).
In the NZZ, Thomas Fuster and Jürg Müller interview David Autor. Autor on polarization:
Der Arbeitsmarkt wird immer polarisierter. Auf der einen Seite haben wir viele gutbezahlte, hochqualifizierte und interessante Stellen. Auf der anderen Seite stehen schlechter entlöhnte und niedrigqualifizierte Stellen, bei denen es quasi darum geht, dem Wohl und Komfort der Wohlhabenden zu dienen. Das ist keine gesunde Entwicklung. Sie schlägt Stufen aus der Leiter des wirtschaftlichen Aufstiegs. Das hemmt die Mobilität.
In Nature, Tom Clynes reports about research indicating that École Normale Supérieure has the highest proportion of undergraduates that eventually win a Nobel prize. The California Institute of Technology comes second ahead of Harvard, Swarthmore, Cambridge, École Polytechnique, MIT, Columbia, Amherst, and Chicago.
In an NBER working paper entitled “The Scandinavian Fantasy: The Sources of Intergenerational Mobility in Denmark and the U.S.,” Rasmus Landersø and James J. Heckman argue that
[m]easured by income mobility, Denmark is a more mobile society, but not when measured by educational mobility. … Greater Danish income mobility is largely a consequence of redistribution … policies. While Danish social policies for children produce more favorable cognitive test scores for disadvantaged children, these do not translate into more favorable educational outcomes, partly because of disincentives to acquire education arising from the redistributional policies that increase income mobility.
Last year, the IMF has joined the MOOC movement. On edX, the online education platform founded by Harvard University and MIT, the IMF contributes a set of “IMFx” courses developed by its Institute for Capacity Development. Courses cover
- Debt sustainability analysis;
- Energy subsidy reform; and soon
- Financial programming and policies (analysis and program design) as well as
- Macroeconomic forecasting.
Open Syllabus Explorer lets you compile rankings of readings assigned at colleges across the English speaking world. The top three texts across countries, fields and colleges are Strunk’s “The Elements of Style,” Plato’s “Republic,” and Marx’ “The Communist Manifesto.”
In the December Issue of Die Volkswirtschaft, Ronald Indergand and Andreas Beerli argue that increased high skilled migration into Switzerland mainly resulted from (i) higher educational attainment in the source countries and (ii) stronger demand by Swiss firms for high skilled labor.
The authors argue that the agreement between Switzerland and the European Union on the free mobility of labor (which is in force since 2002) did not contribute to an improved skill mix. Rather to the contrary, lower barriers to migration for EU citizens might have contributed to a slight reduction in the average skill of immigrants from the EU.
In a blog post, John Cochrane proposes step-by-step (politically unattractive) measures to increase growth:
- Smarter (growth-oriented) regulation, in particular
- Higher equity requirements and less short-term funding rather than complex financial regulation
- Deregulation of health care supply
- More cost-benefit analysis in environmental policy
- Broad-based consumption rather than investment taxes
- Clear separation of allocative and distributive fiscal policy
- Focus on distortions in social programs
- Deregulation of labor markets
- Rational immigration rules distinguishing between permits to entry, reside, or work and citizenship
- Less government intervention in the student loans market
- Less protection, more free trade
- More spending for the legal and criminal justice system
In a blog post, Alex Tabarrok argues that Gary Becker was wrong to argue that an optimal punishment system combines a low detection and punishment risk with a very severe punishment conditional on detection. Tabarrok argues:
We have now tried that experiment and it didn’t work. Beginning in the 1980s we dramatically increased the punishment for crime in the United States but we did so more by increasing sentence length than by increasing the probability of being punished. …
Why did the experiment fail? Longer sentences didn’t reduce crime as much as expected because criminals aren’t good at thinking about the future; criminal types have problems forecasting and they have difficulty regulating their emotions and controlling their impulses. … As if that weren’t bad enough, by exposing more people to criminal peers and by making it increasingly difficult for felons to reintegrate into civil society, longer sentences increased recidivism.
Instead of thinking about criminals as rational actors, we should think about criminals as children. … So what is the recommended parenting approach? … one thing all recommendations have in common is that the consequences for inappropriate behavior should be be quick, clear, and consistent.
An OECD report proposes measures to slow the decline in the performance of school children in Sweden. They include (pp. 8-9):
… setting clear and high expectations for all students, building on current curriculum goals with a focus on developing core skills and enhancing skills for the 21st century.…ensure a better disciplinary climate and teaching and learning approaches that respond to diverse student learning needs, including low and high performers.Improve the access of disadvantaged families to information about schools and support them in making informed choices. In addition, introduce controlled choice schemes that supplement parental choice to ensure a more diverse distribution of students in schools.
The Economist featured a special report on universities. Some elements:
On the value added of university education (see this article):
Employers are not much interested in the education universities provide either. Lauren Rivera of Northwestern University’s Kellogg School of Management interviewed 120 recruiters from American law firms, management consultancies and investment banks. Their principal filter was the applicant’s university. Unless he had attended one of the top institutions, he was not even considered. “Evaluators relied so intensely on ‘school’ as a criterion of evaluation not because they believed that the content of elite curricula better prepared students for life in their firms…but because of the perceived rigour of the admissions process,” Ms Rivera wrote. After the status of the institution, recruiters looked not at students’ grades but at their extracurricular activities, preferring the team sports—lacrosse, field-hockey and rowing—favoured by well-off white men.
On rankings (see this article): More than 50 of the top 100 universities (according to the Shanghai ranking) are located in the US. Switzerland has the highest density of these institutions per capita (6.2 top universities per 10m people, next is Sweden before the Netherlands).
On public and private funding (see this article):
- reform of the tax system: www.thepurpletaxplan.org;
- reform of the health care system: www.thepurplehealthplan.org;
- reform of the social security system: www.thepurplesocialsecurityplan.org;
- an overhaul of banking: www.thepurplefinancialplan.org;
- intergenerational fairness: www.thepurplegenerationalbalanceplan.org;
- an energy tax: www.thepurpleenergyplan.org;
- a reform of the education system: www.thepurpleeducationplan.org.
Dietrich Schwanitz’ book (Wikipedia) covers “Wissen” und “Können” against the background of the German “Bildungskanon”, the liberal education of a cultured, well-bred German-speaker. The very ambition of the endeavor is breath taking and provokes disagreement and objection. But Schwanitz delivers. A lengthy book of nearly 700 pages it is concise and dense and contains lots of food for thought.
Among hundreds of tidbits, here are some:
- Footnote on the footnote (pp. 461–462).
- On Switzerland (p. 596):
Was die Schweizer auf dem Hintergrund ihrer eigenen Geschichte bei den Deutschen am wenigsten begreifen, ist, daß sie mit der antiautoritären Kulturrevolution alle bürgerlichen Tugenden so restlos über Bord geworfen haben. Es sind die Tugenden, die ehemals als besonders deutsch galten und jetzt nur noch in der Schweiz eine Heimstatt haben: Solidität, eine gewisse Ordnungsliebe und Pedanterie, Zuverlässigkeit im Ausführen von Aufgaben und Präzision bei der Produktion von Apparaten, und ein Standard der Sauberkeit und Wohlanständigkeit weit über dem europäischen Durchschnitt sowie ein fest verankerter Glaube an Normen und Regeln.
- In the section about intelligence, a ranking of what might have been the 10 most intelligent men ever (p. 604):
1. John Stuart Mill; 2. Goethe; 3. Leibniz; 4. Grotius; 5. Macaulay; 6. Bentham; 7. Pascal; 8. Schelling; 9. Haller; 10. Coleridge.
- Short summaries of “books that changed the world” (pp. 635–654).
The Economist argues that with the importance of intellectual capital “privilege has become increasingly heritable.” As contributing factors the newspaper lists
- assortative matching
- more stable homes of highly educated parents
- more stimulation of children of highly educated parents: “children of professionals hear 32m more words by the age of four than those of parents on welfare”
- high cost of higher education
- teachers’ unions
- a school system that aggravates disparities