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Friday Interview: One Reason Education Is Overrated

Western Carolina University economist explores the impact of ability bias

Politicians and pundits of virtually every persuasion preach the value of education. But is education really as valuable as conventional wisdom would lead us to believe? Maybe not. In a recent speech for Campbell University’s Politics, Law, and Economics Lecture Series, Western Carolina University economist Stephen Miller put forward one reason why education is overrated. He discussed the topic with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)

Kokai: What is your one reason education is overrated?

Miller: The one reason is something labor economists call ability bias, which is a bit of a technical term, so let me kind of explain. Education gets credit for all kinds of things. People with more education earn more. People with greater levels of education are more likely to vote. People with greater levels of education are probably better citizens in others ways. They’re more likely to read newspapers. They’re more likely to be informed. People with higher levels of education probably are less likely to go to prison.

So there are all kinds of things that are associated with higher levels of education. But, in the labor economics literature, when it talks about people with higher levels of education earning more, it turns out that labor economists became concerned with this thing called ability bias. That is, well, maybe people who are better able to go to school — smarter, better at math, better at reading, more interested in reading — maybe those people have some kind of inherent ability that makes them pursue more and more education.

So any estimate of education’s returns, in terms of earnings, are probably biased by the ability of the people going in and getting higher levels of education. So, ability bias is one reason why education is overrated. There are other theories. Some people just think that education maybe teaches the wrong things or whatever, but what I’m focusing on is ability bias. And it turns out you can look at it for both the benefits to people privately — in terms of how much they earn, and then there’s salaries in life, lifetime earnings — but you can also use it and apply it to the so-called civic returns and other positive benefits of education to society. Those may be overestimated as well.

Kokai: What sorts of research back up this idea of ability bias?

Miller: This is a huge literature, and David Card is a very famous Princeton economist. He has actually done a huge comprehensive review of the literature in The Encyclopedia of Labor Economics. This paper is probably about 80 pages long, and it’s dense with citations and also dense with his own econometrics. So, to briefly summarize what he finds, what he sees is indirect attempts to see if there’s ability bias, or if they don’t see much ability bias out there, it doesn’t appear that ability bias is so much of a valid claim. However, every time there’s been a direct attempt to measure it, where you’ve had a direct measure of people’s intelligence, through an I.Q. test or a test that’s basically an I.Q. test like the SAT or Graduate Record Exam or something like that, then all of a sudden you see that ability bias can be very, very large. Somewhere between 30 percent and 40 percent of education’s estimated returns may actually be due to inherent ability.

Kokai: What should we take away from these findings?

Miller: I’ve actually looked at education’s returns. I’ve actually looked in the literature, and I’ve looked some in my own work related to the external returns of education, at different percentiles. So people who have high levels of intelligence on I.Q. tests, if they are at the very low end, well, then the returns of education seem to be very low. And if they’re in the middle, they’re about what the average estimates seem to show. And then at the higher and higher ends, it’s actually increasing —it’s actually increasing greatly.

So the question is kind of where you are on the curve, what are you going to get out of more education? People who have more inherent ability, but also it’s about attention span and interest. The literature has found some interesting details. There are people who basically are very creative and entrepreneurial but not very good at sitting still. And education doesn’t have much of a return for them because it turns out, because they are creative and entrepreneurial, even though they have short attention spans, they have big earnings potential. And it’s actually made bigger if they don’t spend so much time going out and learning everybody’s theory of entrepreneurship.

Kokai: Any other implications?

Miller: The implication is that the returns to education will decline as you take the least educated people in society and start giving them not just 12 years of education, but 14 years, 16 years, 20 years of education. If you give everybody a Ph.D., the idea is that those are diminishing returns. You’re going to get less and less for dollars spent on education in terms of increased productivity, and I would argue also in terms of increased civic participation and things like that.

Kokai: But isn’t it valuable for any student to be exposed to the same types of study, debates, conversations that the best students are having at the highest levels of higher education?

Miller: Basically, no. I don’t think listening to other people talk about W.B. Yeats would benefit everybody. And not only would it not benefit them, it would actually take away precious time that they could be spending learning something more directly relevant to them that would actually advance at least their own interest, but also advance, lead them to have higher earnings in life. So I guess I’m falling in line kind of with the political scientist Charles Murray, where I would say there needs to be more focus on trade schools and things like that — people learning trades, people learning marketable job skills — rather than everybody falling into this category of, you know, you need a four-year liberal arts degree from, most especially, some elite liberal arts college. It’s not clear that everybody benefits equally from those degrees. As a matter of fact, I’m not sure that any more than a small percentage of the population benefits from that kind of an educational model.

Kokai: So, in some cases, you’re saying more education is actually counterproductive?

Miller: I sometimes ask students … I point out that the returns of education are very high and that people with higher degrees tend to earn more. But then I say, you have to keep in mind these are people who were able to be very focused and do very well and excel, and there’s a big difference between the earnings of people who graduate from the top 10 percent of their law school class and people who graduate from the bottom 10 percent, in terms of their lifetime earnings. And there’s little doubt to me that if you were to look at the bottom 10 percent in most graduate programs, the bottom 10 percent of the people who stick with it —the people who drop out figured that out somewhere along the line, right, that the opportunity cost was too high — but you look at their outcomes, and I’m guessing that if you were to interview them, most would say, “No, I really would have been better off not getting that degree.” And so, … I’m making an argument for lower levels of education and more focus on programs that actually develop direct job-marketable skills.

Kokai: Do you hope research of this type can battle the stigma associated with not going to college?

Miller: What I have observed as a professor is, among students, the social class, the background — like if your parents were college-educated — a lot of students believe that they must be college-educated. And for a lot of students, if their parents weren’t college-educated, even if they’re doing very well and they’re actually very inclined academically, they’re much more likely to say, “Well, I don’t know about graduate school. Sure, I had a 4.0 in undergraduate, but now it’s time for me to start working.” I mean, that’s what you do — you go to college to get a job. And so I’ve seen both sides of it, where the culture and background of a student seems to determine how far they go in school and whether they pursue higher education and graduate level education, rather than their ability and their interest in the subject, which is a little distressing to me. But I wish that, yes, that stigma could be kind of reduced.