Stumbling and Mumbling

The gap year puzzle

Bryan Caplan's discussion of gap years reminds of a remarkable point made by Ian Walker and Yu Zhu (p27 of this big pdf). They estimate that UK graduates who took gap years earn around a quarter more than ones that didn't, controlling for other things. 
This means the return to the year between school and your degree is about as great as the return to your degree.
A gap year is a lot more than a gap in your CV.
This, I suspect, is because people who take gap years are more confident, better at languages and more middle class than ones that don't.
Is this another victory for the signalling hypothesis?

Alan Johnson inverts Marx

Alan Johnson's proposal to extend the school-leaving age to 18 is being widely criticized. What's not been so much noticed is that this idea rests upon a particular assumption about human nature, and an inversion of Marxism.
The assumption is that all people have "potential", an an innate capacity to be more than the unskilled drones they'll be if they leave school at 16. Everyone, therefore, can benefit from education or training.
This assumption isn't one of Alan Johnson's idiosyncrasies. It underpins much New Labour thinking and policy - for example in expanding higher education, and in setting up Sure Start.
Brown is especially keen on the idea:

Our history is the story not just of great creative genius in action, but of men and women of talent or even genius who might have been so much more: poets, philosophers, scientists doctors inventors but were forever denied the freedom to develop their potential.
Perhaps in a pre-industrial or an industrial society we could afford to disregard that loss; but in a post industrial society where what gives you competitive advantage and wealth is your creative ability, prosperity will depend upon our ability, through investment in education, to tap the potential and bring out the best not just in the few but the many.

This vision of human nature can be found in Marx. Perhaps his main objection to capitalism was that it stunted human nature:

Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole. (Capital vol I ch 25 sec 4)

And this is where New Labour inverts Marx. To Marx, it was the capitalist system itself that was responsible for preventing people realizing their full potential. New Labour, however, seems to think people themselves are responsible for this failing - hence the plan to force them into training or schooling.
This inversion of Marx is, I think, false. Whether it is or isn't, it has two unpleasant effects.
First, it's illiberal. Rather than aspire to liberate people from capitalism's worst features, New Labour ladens them with extra burdens.
Second, it's inegalitarian. The natural effect of holding people responsible for developing their potential is to respect more those who have developed it. The upshot is a cringing deference towards "distinguished" people, a faith in experts and managers, and a distinction between "VIPs and ordinary people", to use Fatty Falconer's expression.       
In short, what New Labour's conception of potential forgets is this:

Just because someone doesn't have any formal qualifications does not mean they are a bad person or are a deadweight on society, they can still an active and important role in society.

So says the Reactionary Snob - who on this point is more egalitarian than New Labour.
Which goes to show that when the Left abandons Marxism, it becomes just mushy anti-egalitarian drivel. 

Private education & earnings

Public schoolboys earn more than others, even controlling for educational attainment. This paper (pdf) estimates that male university graduates who were privately educated earn 4.4% more than average, even controlling for degree class, A level results, university and subject studied.
By contrast, graduates from social classes IV and V earn 2.4% less than average.
This implies that, among men with identical degrees and A levels, the return to a private education relative to a lower class background is 6.8%.
In one sense, this is quite a lot. It's almost twice the premium on a first relative to an upper second (3.8%), and roughly the same as the premium to an economics degree relative to lesser other disciplines.
In another sense, though, it's quite small - less than £2000 a year. So it only justifies part of the expense of a private school.
Why is there such a premium? I couldn't possibly speculate - that would be chippy.

Brighton's school lottery: not enough

Anyone who supports the principle of equality of opportunity should have a problem with Brighton council's decision to allocate some school places by lottery - it doesn’t go far enough, for four reasons:
1.The allocation of places will still be mainly postcode-based, with the lottery only for oversubscribed schools. This means most school places will be allocated by house price.
2. It doesn’t do enough to offset familial disadvantage. Harry Brighouse proposed that good schools should have an incentive to select kids from poor homes. The Brighton scheme doesn’t do this. Indeed, it might be that no school lottery can do much to offset the disadvantage of coming from a bad family. This is one interpretation of this pdf from Steve Levitt. It showed that pupils winning places at good schools in Chicago’s school lottery did no better on academic tests than those getting places at worse schools.
3. Whilst the best schools are in expensive areas, kids from poor backgrounds will be at a disadvantage even in a perfect lottery. This is because they’ll have to spend more time travelling to the good school than the richer kids who win the lottery, and so have less time available to spend on extracurricular personal development.
4. Even a perfect lottery still leaves some people disadvantaged. Let’s be clear here. A school lottery is not the introduction of randomness into life-chances. It’s the introduction of another lottery; it’s a lottery what family you’re born into. Under a school lottery, people have a one-in-16 chance of getting both bottom-quartile parents and bottom-quartile education. Many, therefore, will suffer a double disadvantage through no fault of their own.
For these reasons, I agree with Nick Cowen – this is only a teeny step towards equal opportunity. As an equal opportunity policy goes, it’s vastly inferior to the policy of equalizing exam results across schools – though of course this can only be done at a national level, not by any local authority.
Brighton’s scheme has, however, revealed two things.
One is that the Stupid Party is well-named. David Willetts says Labour “should be focusing on raising standards in all schools." This is true, but misses the point. This policy is about equal opportunity, not overall school standards. Even if standards were higher than they are, some schools would be better than others. So there’s a question of how places should be allocated.
Secondly, the hostility to the plan reveals that even small steps towards equal opportunity will be greatly resented by some people. As Not Saussure says, there's a lot of cant about fairness when your own children are involved.

Trash research from Universities UK

Here's some wonderfully sloppy reporting from the BBC:

University graduates earn on average about a quarter more than young people who leave school after their A-levels, a study has suggested. Higher education organisation Universities UK measured the economic impact of getting a degree. It found average additional earnings of £160,000 over a working life.

In fact, Universities UK didn't measure anything. They commissioned PriceWaterhouseCoopers to do the research (pdf). And they didn't measure anything either. The "quarter more" estimate (actually 23.5%) - from which the £160,000 figure is derived - is lifted from table 4.2 of this paper (pdf), which PWC contrive to misname.
PWC claim this estimate is "representative of the wider literature."
Well, it ain't representative of this paper, which PWC don't cite. It estimates that male graduates earn just 15.2% more than ones with A levels. And roughly one-sixth of them earn less than 11.1% more.
Even more scandalously, the report claims that "there has been no erosion of the financial benefit of a degree even though there has been a substantial incresase in the supply of graduates."
Evidence for this comes from this paper (pdf). Strangely, however, the report fails to mention this paper by Nigel O'Leary and Peter Sloane. It concluded:

There is concerted evidence to suggest that the expansion in student numbers has led to some moderation of the financial rewards offered to recent cohorts of graduates. These findings are more pronounced for women than they are for men, are more pronounced in the lower reaches of the skill/earnings distribution than at higher skill/earnings levels, and are more concentrated for arts degrees.

For example, they estimate that among women born in the 1970s, the degree mark-up was 22.8%. But for women born in the 1980s, it's only 14.5%.
The report also claims that "in Britain's knowledge-based economy there is every prospect that this demand [for graduates] will continue to grow in the future."
But it provides no evidence for this. This just seems like vindication of Simon Barnes' wise words:

One of the rum things about human life is that we treat any stage we happen to be going though as something permanent and unchangeable, as if spring will never come, as if happiness will never end, as if youth will last for ever.

Certainly, the report doesn't cite this paper which points out that India and China are becoming massive suppliers of cheap skilled labour, which could depress graduate earnings in the future. It says:

The expansion of higher education may...create a substantial wastage of talent amongst college and university graduates leading to a greater disersion in incomes as graduates accept sub-graduate work.

What Universities UK is doing, then, is not research. It's just touting  for business, by painting as bright a picture as it can of the returns to education and (deliberately?) ignoring dissonant evidence. But who cares about the futures of our young people when there's a few bob to be made out of them?

Why does education pay?

Why do university graduates generally earn more than non-graduates? The finding that returns to arts degrees for men are very low sheds light upon this.
Such degrees should be a signal of high ability; entry requirements for many such courses are as high as for sciences, and completion of such courses are signals of high communication skills at least.
And these courses also create  human capital; languages and essay writing are useful skills.
That such degrees pay badly is, therefore, not obviously consistent with either the human capital or signalling theories of how education boosts earnings.
There is, however, a third theory that doesn't get the attention it deserves. It's the idea of incentive-enhancing preferences discussed here (short pdf) and here (long pdf).
The idea is that bosses want workers with the right attitude - ones they can trust. And arts' graduates can't be relied upon to have the right attitudes. They're interested in soft, fluffy, arty-farty things like culture and books rather than the hard bottom line of business. So they're not so employable.
This problem is worse for men than women because of cultural stereotypes. We expect women to like fluffy things like art, books and languages - it's part of their charm. So a woman with an arts degree isn't signalling such wrong attitudes as her male equivalent, and so is more employable (relative to other graduates) than him.

Returns to degrees

Going to university might not pay - if you're a man studying arts or languages.
This new paper (pdf) estimates that male arts and humanities graduates born in 1970 have an hourly wage only 8.5% greater than that earned by men with A levels only; this controls for ability and family income, among other things. Such is the volatility around this estimate that  we can't be sure it's not zero.
For men with other degrees, though, university does pay. Science graduates earn an average of 17.7% more than non-graduates, whilst social science graduates earn 24.7% more.
For women, returns to arts degrees are higher and statistically significant (13.3%) but returns to science and social science slightly lower than they are for men.
For both men and women, the return to a good degree (2.1 or better) relative to a bad one (Desmond or worse) are about the same, at 8%.

Ruth Kelly: a defence

Yet again, it's time to defend Ruth Kelly. Some of the criticisms of her decision to send one of her children to private school don't seem valid.
1. "I think it's wrong. You should set an example as a minister and support your local school" says Ian Gibson.
But it's not the job of anyone to support state schools, especially at the expense of someone else (the child). It's the job of state schools to support people, not vice versa.
2. "Ruth Kelly wants her children get a good education, but at the same time she and Labour want to limit the chances of everybody else getting the same chance."
I don't think she does want to limit others' chances. She's never argued against the right to educate people privately. If anything, as education secretary she supported greater diversity:

The needs and aspirations of individual pupils are so varied, it is unlikely that any single institution will be able to fulfil them satisfactorily.

Of course,   she didn't do enough to improve state education. But there's a severe limit to how far any central manager can improve state schools.
The way to improve state schools - if it can be done at all - is by abandoning managerialist ideology. But this option is/was simply not available to Ruth. Even as a minister, she has little more freedom than the rest of us. As I've said, power enslaves rulers as well as the ruled.
Indeed, in one sense, there's something admirable about Ruth's decision. She's trying to find a little autonomy, to show that politics should be a limited activity which pollutes as little as possible one's real life - and, perhaps, to signal her distance from New Labour's more totalizing statist tendencies. She should be criticized not for doing this, but for not being more explicit about it.
Nor should she have to resign for doing so. If all ministers were required to agree 100% with all aspects of government policy, no-one of any quality would ever become a minister in any government.
All this said, I - like most lefties - have an instinctive visceral hatred of private education. One reason for this is that we don't like people getting headstarts in life that aren't available to others - although in Ruth's case it's unclear whether this applies, as her decision seems motivated by a desire to compensate for a disadvantage, rather than seek an advantage.
But let's be honest. Our main reason for hating private education is that it disproportionately churns out people who are complete and utter knobheads.

Who needs science teaching?

The great and good are moaning that the  GCSE in "scientific literacy for the 21st century" is a dumbing down of science:

Dr Eliot Forster, vice president of development at the global pharmaceutical company Pfizer, warned that the new GCSE could result in the UK falling behind developing countries in leading scientific research and development...
"If the UK is to maintain its competitive advantage as a location for pharmaceutical R&D, it needs to take action to ensure that its schools and universities continue to produce science graduates of the highest calibre."

But are science graduates really so valuable? There's a simple test of this. If they are, the salaries of science graduates will be higher than those of other graduates.
But they aren't. Just look at the job ads in the New Scientist. Or look at this research (pdf). It shows that the return to a science degree is slightly less than the return to degrees generally. And it's fallen a little in the last few years.
The market, then, is saying we don't need science graduates more than graduates in other disciplines. Quite the opposite. Dr Forster just wants more cheap labour, and he's dressing up his own self-interest as the national interest.
Of course, it's brute philistinism to claim that the only role of education is to prepare people for employment. People should be taught science not because the economy needs scientists, but because they should be taught the importance of testing theories against the facts, rather than trusting authority.
The only trouble is, when we do this, we find that authority figures often spout nonsense.

A waste of money

Tom Hamilton says private schools are a waste of money. This raises a puzzle.
Let's assume the average private school place costs £9777 a year. And let's say a parent decides to invest this money, and send their kid to state school instead. Then, assuming 11 years of investment at a real return of 2%, our parent could hand their child over £130,000 (with the obvious strings attached, natch) when it leaves school at 18.
Wouldn't most kids prefer the £130,000 plus the state education to private education?
So why do so many parents prefer private education? Is it really so superior to state education? Could it be that they regard education as a positional good, and one worth paying through the nose for? Are they paying to get their children social contacts rather than education per se?   Or is the chance of a marginally better education really valuable in winner-take-all economies?