A role for Simon Hughes?

The government has asked Simon Hughes to “persuade as many [people from poor backgrounds] as possible to consider higher education.”
My immediate reaction was that this is just witless economic illiteracy. The way to persuade people to do something is to give them incentives. But this is the precise opposite of what the coalition has done in raising tuition fees and scrapping Educational Maintenance Allowances. The belief that such policies can be offset by some “special advocate” is to give too much weight to PR flummery and too little to hard material facts.
But then I had a second reaction. Could it be that poor students’ educational choices are shaped by a cognitive bias? If so, Hughes might have a useful role, insofar as he combats such a bias.
I’m thinking here of the availability heuristic. If you grow up poor, you are usually surrounded by adults who are poor; I was 21 before I met a graduate who wasn‘t a teacher. This can give you a downwardly biased estimate of the earnings and job opportunities which a degree brings. As a result, some bright but poor kids mightn’t attend university. If Hughes can publicise the fact that the average graduate earns £3.73 an hour more than the average A level holder, then he might indeed persuade some poor students to go to university.
But would this lead to a net increase in university applications by people from poor backgrounds?
Not necessarily. There’s another cognitive bias which might affect the decision to apply: over-confidence. It’s possible that other poor kids over-estimate their chances of earning megabucks in the City and so go to university even if it does not, in fact, pay.
And let’s be clear. For a lot of men (returns are better for women), tuition fees of £7000 a year will be a bad investment. Ian Walker and Yu Zhu have estimated that this is the case for most men studying the humanities and social sciences other than law, economics or management, and for the lowest quartile of science graduates.
A priori, then, it’s not clear to me that providing better information will, on its own, get more poor kids into university. Maybe my initial reaction wasn’t so wrong.

Comments

[Tom Addison]

For some kids (mainly lads) from working class backgrounds, going to University might leave them being alienated from their friends, and for some going to Uni and being a good boy at school isn't worth that cost.

This isn't something that just happens one day, they don't just announce they're off to Uni and then end up discarded by their mates a couple of hours later, it happens in the early teens, where they must make a choice between doing their homework or drinking cider on a park bench.

Using a sample size of one, I had a mate at school from a working class background who was basically left with the choice, being a "swot" or maintaing a high level of popularity. He chose the latter, and suffice to say he isn't doing too well now.

But I'd have thought that one way bright, poor kids can get good, well-paying jobs without risking any damage to their reputation and standing amongst their friends and peers is through apprenticeships.

If you want kids from poor backgrounds to go to Uni or to do something similar with their lives, give them opportunities for progession in life that don't require them having to a a bookwork revision bunny, i.e., a manly apprenticeship in doing something useful.

[Tom Addison]

Sorry, should say, "...having to be a bookworm revision bunny"

[Tim Worstall]

"And let’s be clear. For a lot of men (returns are better for women), tuition fees of £7000 a year will be a bad investment. Ian Walker and Yu Zhu have estimated that this is the case for most men studying the humanities and social sciences other than law, economics or management, and for the lowest quartile of science graduates. "

Such returns on investment will be true whoever is paying for the education by whatever method.

At least when it's the person getting the return (or not) making the decision about the investment (or not) we're likely to get costs and benefits at least roughly aligned.

[Keith]

Why should anyone care what Simon Hughes says about this issue any more than anyone else?

It is unlikely that most potential undergraduates perform cost benefit analysis of the kind being discussed by economists; attending university is a cultural habit and a byproduct of curiosity about particular branches of knowlege or interst in Jobs connected with a certain academic interest.

The Market price of wage Labour does not capture the positive externality represented by Academic study for the community. To use wage Labour as the decisive measure is a conceptual error. It is the old vice of the practitioners of the Dismal Science to know the price of everything and the value of nothing.

[Rab]

Has anybody ever considered the consequences of Simon Hughes succeeding? I mean, what would happen if loads of working class youths decided to go to university?

Would they all (or most of them) get better paid jobs? And if they they didn't and therefore never reached the magic figure of £21,000, what would happen to the debt?

[Keith]

Rab,

Prof. Delongs' parot says "surply and demand".

As the number of degree holders rise the wage premium over non graduates must fall in the same way that clarks wages fall relative to manual Labour during the Victorian era as more people got a secondary education. Most parents had to contribute partially at least until quite late, before the state assumed fully the cost. So people were paying for a smaller and smaller wage premium each year.

So the more you increase the number of graduates the less justification there is for the student/ parents assuming the cost as the private return will fall. Eventually there is no premium on average at all.

Fees are a tax hike. The people who should pay more are Gideon Osbourne and Cameron and Clegg
and the other trustifarians. The upper class not the middle class in other words. But if the salary receiving middle keep voting tory they will get kicked in the vitals by the trustifarians. But they never learn. Too busy drinking the Daily Mail cool aid.

[charlieman]

@Tim Worstall: "At least when it's the person getting the return (or not) making the decision about the investment (or not) we're likely to get costs and benefits at least roughly aligned."

Why assume so much rationality for 18 year olds? I understand that their mates in a few years have been given a cracking good deal (£27,000 loan, long pay back, written off if they can't pay). Some of them do not understand that was the best deal on the table, far better than LibDem waffle about graduate tax.

Tim, we know that education is a life long thing and that we should not be screwing up kids by encouraging them to blow their budget to go to university before it suits them.

[Luis Enrique]

if you suspect that more information might 1. encourage more bright kids to go and 2. discourage the overconfident, resulting in no net change in the total number of poor kids attending, that's an unambiguously good thing, a change in the composition of students, isn't it?

One of the strongest objections to the increase in fees is that it will will not merely discourage poor kids for whom the benefits do not exceed the costs (defendable on efficiency grounds) but it will also discourage poor kids for whom the benefits would exceed the costs, but who suffer from 'debt aversion' for some sort.

If I try to imagine what determines the decisions of 18 year olds from poor families, it's not obvious that 'incentives' in the narrow sense are the largest factor - as in your availability heuristic, I think it's about expectations, peer groups and what I can't think of a more elegant way of describing than your "perceived possibility set". I imagine that for lots of poor kids, university just is not presented as something that is for them. I don't know if this - social norms and such like - is the same thing as a "cognitive bias" - which is in danger of becoming a catch-all phrase.

So I think that people who are worried about fees putting off poor kids ought to be supportive, in principle at least, of attempts to make university appear to be more accessible in the minds of kids attending schools where few tend to go to uni. What's possible in practise, I don't know.

That said, they should re-instate the EMA. imho that's much more of a scandal than changes to how university education is financed.

[The Silent Sceptic]

So if we assume that things are never as they seem, the ConDem policy starts to look a bit more sensible (from their perspective).

It would be politically unwise to renounce Labour's commitment to 50% of people attending university. But on the other hand, paying for all those people to do economically useless degrees (those for which increased lifetime tax take is less than the cost of the course) is very expensive.

Solution: just make sure that the cost/benefit analysis must be done by those attending. Although individual 18 yr olds might not work it out, the accepted lore will soon be that it isn't worth it for a large proportion of degrees. The result is that courses close, departments close and universities close. The cost of higher education is slashed, and efforts can be focussed on the high performing institutions for whom tax take is worth the funding.

I'm not saying that it's morally acceptable, but it's a very effective way to reverse the mass expansion of higher education if that's what you want to do. Why you would put up with the political cost of higher tuition fees rather than closing the institutions is a mystery. For the conservatives it's probably because your core constituency can afford the higher fees.

[Bruce]

If everyone went to university, would a cleaner earn substantially more than they do today?