Is College Still Worth It? The New Calculus of Falling Returns [pdf] • Hacker News Board

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#281

Post by dahart » Sat, Dec 28, 2019, 4:43 PM UTC

rayiner wrote: post #274

dahart wrote: post #251

Earlier quoted context omitted.

Productivity isn’t the metric that determines whether the government recoups student loan defaults, income is. And the income of graduates is still multiples that of non-graduates, as shown by the data in this article.

Individually, yes. But that doesn’t mean that people are making more money in the aggregate by more people going to college. If the government subsidizes college and that results in more people going to college, but employers just respond by taking previously non-college jobs and making them require college degrees, there isn’t actually more money in the economy as a result to justify the government expenditure.

You’re moving your own goal post. You complained about the government’s relatively small outputs from the student loan program, which is absolutely recouped many times over by today’s income premium, in the form of income taxes, regardless of whether the economy grows.

Your hypothetical isn’t the way things are actually playing out, so I don’t feel like it needs to be argued. Degree holders are generating value on average, so the economy does, in fact, have more money as a result of education. And the government also makes money on it’s investment in education on top of that.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#282

Post by mlyle » Sat, Dec 28, 2019, 4:45 PM UTC

vasilipupkin wrote: post #189

mlyle wrote: post #110

Earlier quoted context omitted.

> Their familial controls don't make much sense to me. There's a lot of recent evidence that, all else being equal (controlling for educational attainment, test scores, and grades) parental income/social class has a huge impact on income. That is, if you come from a lower social class, you can expect a lower income increase from college than someone coming from a higher social class. There's significant policy implic…

no, that’s completely wrong. You are confusing averages and conditional probabilities. On average, those from higher classes may do better - that doesn’t mean that a kid from s lower social class should take that as guidance. It means we should try to erase or lessen differences of opportunities between classes. Some of these differences are probably innate. A brain surgeon is likely smart and his kids are probably a…

> no, that’s completely wrong. You are confusing averages and conditional probabilities. On average, those from higher classes may do better - that doesn’t mean that a kid from s lower social class should take that as guidance.

??? You're saying that someone should not consider the outcome distribution of people similarly situated to themselves when making a choice? Isn't that completely rejecting empiricism?

If, from a public policy standpoint, our effort has been to get to the poor to college to end poverty; and the educated poor do do better with education, but not nearly as well as their middle-class cohort; and the present-value of education is smaller than the present-value of their lifetime wage increases-- one has to question whether the policy is well informed.

If you're asserting that the picture is unduly distorted by those at the very highest spread of the income distribution-- you're right. But the effect is still when we look at median outcomes.

> Some of these differences are probably innate. A brain surgeon is likely smart and his kids are probably also smart.

Presumably we'd be able to measure this and control for this.

> Some, but most are due to informational deficiencies and networking effects.

Yes, and various kinds of cultural cues about class of upbringing that persist after education and act to limit opportunity.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#283

Post by dahart » Sat, Dec 28, 2019, 4:47 PM UTC

xyzzyz wrote: post #277

dahart wrote: post #260

Earlier quoted context omitted.

No, income taxes are extracted before the premium is calculated. I’m not talking about the wealth premium that a degree gives you, I’m talking about the income taxes that the government extracts from people who have degrees, which is completely unaffected by the recent downward trend in the wealth premium that this paper is calculating. This is a case where the absolute, uncontrolled data is very important to differe…

I’m sorry, but what you’re saying here doesn’t make sense. If, after controlling, college premium is zero, it means that if nobody at all went to college, the wages and thus also the tax receipts would be the same. It could be that in that scenario different people would make these wages than now, as the distortionary effect of college wouldn’t then deprive them of it in favor of some graduate from better school, but…

> If, after controlling, college premium is zero, it means that if nobody at all went to college, the wages and thus also the tax receipts would be the same.

No, that’s not true, you’re missing a very important point. Taxes come out of income, they aren’t extracted after you control for everything, they are extracted on your income, and the income for 4-year degree holders is 2x the income of non-degree holders on average.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#284

Post by prepend » Sat, Dec 28, 2019, 4:49 PM UTC

ipython wrote: post #217

kortilla wrote: post #176

Earlier quoted context omitted.

I take it you didn’t go the STEM route then. ;) More seriously, anecdotes are terrible when giving advice to fresh high school seniors on their way to graduation. When people think of degrees in certain fields, they gravitate to the successful people (“I’ll study acting and make millions like the famous actors I know”, etc). They don’t think of and aren’t even aware of how many people get those degrees and fail hard.…

If that friend is himself an actor, or someone else who can influence hiring decisions, then I would say go for it! At the end of the day, people hire you. Not data. After all, who says that a teenager can tell apart badly interpreted data any better than poor anecdotes?

At the end of the day, data reflects what all those people hiring people do. Anecdotes are randomly useful for predicting because maybe you luck out and find the right person, but probably you won’t.

Teenagers should be able to understand data by the time they pick a college or career.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#285

Post by dahart » Sat, Dec 28, 2019, 4:52 PM UTC

sokoloff wrote: post #271

dahart wrote: post #260

Earlier quoted context omitted.

No, income taxes are extracted before the premium is calculated. I’m not talking about the wealth premium that a degree gives you, I’m talking about the income taxes that the government extracts from people who have degrees, which is completely unaffected by the recent downward trend in the wealth premium that this paper is calculating. This is a case where the absolute, uncontrolled data is very important to differe…

What the “other” side is arguing is that if you’re using these income taxes as justification for the government backed loans because those loans allow the attendance of college, then it matters whether or not those same people going directly into the workforce, starting working 4 years earlier, and using their talent and ambition would end up paying a similar or greater amount of income tax. In short, you’re saying o…

I’m not saying that only the outcome matters, I’m saying that the government’s financial investment on the student loan program is seeing high positive returns right now, despite the default rate on those loans.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#286

Post by sokoloff » Sat, Dec 28, 2019, 4:54 PM UTC

dahart wrote: post #285

sokoloff wrote: post #271

Earlier quoted context omitted.

What the “other” side is arguing is that if you’re using these income taxes as justification for the government backed loans because those loans allow the attendance of college, then it matters whether or not those same people going directly into the workforce, starting working 4 years earlier, and using their talent and ambition would end up paying a similar or greater amount of income tax. In short, you’re saying o…

I’m not saying that only the outcome matters, I’m saying that the government’s financial investment on the student loan program is seeing high positive returns right now, despite the default rate on those loans.

Because you’re calculating that the income levels attained (and income taxes paid) by the specific cohort who attended college are caused by their attendance, rather than merely correlated with it. If they’re caused, the program should take credit for the returns on that investment.

If that cohort of people (generally more ambitious, societal/educational rule following, and possibly more intelligent [at least more “book smart”] than the national median of college non-attendees) would have earned enough to pay the same income tax anyway, those gains cannot be ascribed to the government student lending.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#287

Post by solatic » Sat, Dec 28, 2019, 5:00 PM UTC

brownbat wrote: post #195

This is a really interesting addition to the literature if you dig through it, with subtle distinctions between income gains and wealth gains and interactions with demographics. It's not a simple "college ain't what it used to be" story. The biggest puzzle is how to explain why recent grads still command significantly higher incomes than nongrads without accumulating significantly more wealth. Increasing tuition is a…

> The biggest puzzle is how to explain why recent grads still command significantly higher incomes than nongrads without accumulating significantly more wealth.

Is it? Permit this armchair economist a theory:

People with degrees tend to use those degrees in pursuit of career development. Career development causes people to move to "cluster" regions e.g. Silicon Valley, New York "Cluster" regions tend to have a high cost of living due to insufficient housing and transportation infrastructure which didn't grow at the rate of other economic development The high cost of living eats up the additional income from the degree, preventing wealth accumulation. Add on long-term macroeconomic effects of the fall in entrepreneurship and other indexes of economic dynamism, aligned with increases in consumer spending, and you have a high-income, relatively comfortable serfdom.

To test the theory, try controlling for geographic area - there should be a clear increase in wealth accumulation of degree-holding entrepreneurs in low cost of living areas, compared to non-degree holders who still somehow eke out a living in high cost of living areas.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#288

Post by harrisonjackson » Sat, Dec 28, 2019, 5:09 PM UTC

chrisseaton wrote: post #194

throwaway100773 wrote: post #188

Earlier quoted context omitted.

The issue is that trades don’t scale like all of the things you mention. Even if you own a very successful plumbing company, your ability to scale is constrained by geography, labor costs and finding people you can trust to manage your company. Not to mention, there are market forces working against the plumber trying to scale, and the plumber’s ability to affect policy is proportional to the ability to scale. Anecdo…

> The issue is that trades don’t scale like all of the things you mention. The UK famously has a plumber worth $100 million - Charlie Mullins.

This is a great argument for starting a company in an industry where you are an expert, but this guy isn't doing house calls for hourly pay. He's taking a big cut of alllll the house calls.

According to wiki he is paying his plumbers more than I'd expect, which is cool.

>The company promotes itself as providing a high-quality service, employing "£80,000/year plumbers", charging £80–200/hour depending on time of day and service performed."

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#289

Post by sokoloff » Sat, Dec 28, 2019, 5:15 PM UTC

scarface74 wrote: post #261

macspoofing wrote: post #228

Earlier quoted context omitted.

>How “discerning” could you be when making loans to teenagers with no income and no credit history? Very. They may very well take into account your grades and SAT score to determine feasibility of repayment. >The only thing that would happen is that the banks would force all loans to be co-signed. They may and why shouldn't they? This will deter expensive colleges and push students to cheaper alternatives like trade…

Very. They may very well take into account your grades and SAT score to determine feasibility of repayment. You act as if the SAT score is a predictive of future success. Do you know how easy it is for parents of means to pay for “sat tutorials” that will help their kids improve their scores significantly? Ask me how I know. They may and why shouldn't they? This will deter expensive colleges and push students to chea…

College Board suggests that going from 0 to “6-8 hours” of prep is good for about 90 points and to 20 hours is good for only an additional 25 points.

It would seem folly to take the test with 0 prep and there’s a Khan Academy free prep course that you could use for the 20 hours of prep.

Given that, I’m not so sure that intensive prep is going to boost someone’s score significantly beyond basic prep.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#290

Post by chrisseaton » Sat, Dec 28, 2019, 5:16 PM UTC

harrisonjackson wrote: post #288

chrisseaton wrote: post #194

Earlier quoted context omitted.

> The issue is that trades don’t scale like all of the things you mention. The UK famously has a plumber worth $100 million - Charlie Mullins.

This is a great argument for starting a company in an industry where you are an expert, but this guy isn't doing house calls for hourly pay. He's taking a big cut of alllll the house calls. According to wiki he is paying his plumbers more than I'd expect, which is cool. >The company promotes itself as providing a high-quality service, employing "£80,000/year plumbers", charging £80–200/hour depending on time of day a…

Someone said a plumbing business wouldn’t scale. He scaled a plumbing business. Obviously in scaling it, this multi-millionaire is not personally doing the plumbing anymore - you are right. I don’t see how that means he hasn’t scaled it though?