My Ph.D. Micro teacher, David Card, won the Nobel Prize last week. My best-known piece on Card examines the tension between his research on the minimum wage and his research on immigration. My most extensive discussion of his work and intellectual influence, however, appears in Chapter 3 of The Case Against Education. Here’s the excerpt. Enjoy!
Labor Economists Versus Ability Bias
Labor economists aren’t merely attuned to the possibility of ability bias. They’ve long felt a professional responsibility to measure it. But over the last quarter-century, labor economists have surprisingly moved to the view that there’s not much bias to measure. A famous review of the evidence by eminent economist David Card concludes ability bias is small, non-existent, or even negative.[i] I call this verdict the Card Consensus. Many, perhaps most, elite labor economists not only embrace it, but rely on it for practical guidance. We see the Card Consensus in top scholarly venues like the Journal of Economic Literature.
[T]he return to an additional year of education obtained for reasons like compulsory schooling or school-building projects is more likely to be greater, than lower, than the conventionally estimated return to schooling.[ii]
We see the Card Consensus in top policy initiatives like the Brookings Institution’s Hamilton Project:
[I]t’s possible (and even likely) that individual college graduates have different aptitudes and ambitions, and might even have access to different levels of family resources. All of these factors can impact earnings. However, the evidence suggests that these factors don’t drive the impressive return to college; instead the increased earning power of college graduates appears to be caused by their educational investments.[iii]
Even analysts who don’t cite the Card Consensus enjoy its protection. Well-publicized calculations of the “value of college” typically ignore ability bias altogether.[iv] The Card Consensus neuters criticism of this omission. How can you attack a tacit “0% ability bias” assumption as a fatal flaw when plenty of experts stand ready to defend it as a harmless simplification?
This is a disorienting intellectual situation. Statistically naïve laymen blithely infer causation from correlation: Since college grads earn 73% more than high school grads, college causes a 73% raise. Economists who don’t specialize in labor smirk at the laymen’s naiveté; they take sizable ability bias for granted. But economists who do specialize in labor now largely stand with laymen. While ability bias is intuitively plausible, the Card Consensus tells us, “Move along, nothing to see here.”
What about abundant research from last section that detects hefty ability bias? The Card Consensus barely acknowledges it.[v] Why not? Labor economists’ most common rationale is that no one can measure all the abilities that cause both academic and career success. True enough; but that just means ability bias is worse than it looks. Supporters of the Card Consensus also occasionally muse that high-ability students might leave school sooner:
[S]ome people cut their schooling short so as to pursue more immediately lucrative activities. Sir Mick Jagger abandoned his pursuit of a degree at the London School of Economics in 1963 to play with an outfit known as the Rolling Stones… No less impressive, Swedish épée fencer Johan Harmenberg left MIT after 2 years of study in 1979, winning a gold medal in the 1980 Moscow Olympics, instead of earning an MIT diploma. Harmenberg went on to become a biotech executive and successful researcher. These examples illustrate how people with high ability – musical, athletic, entrepreneurial, or otherwise – may be economically successful without the benefit of an education. This suggests that… ability bias, can be negative as easily as positive.[vi]
Straightforward rebuttal: Name any ability the well-educated tend to lack. Outliers have ye always. But the well-educated are, on average, abler across the board. No one hears about a kid quitting high school or college and says, “Wow, he must be talented.”
At best, then, the Card Consensus casually throws away a large body of contrary evidence to get off the ground. But it’s worse than that. The Card Consensus casually throws away the best evidence. Worried you’re improperly giving school credit for pre-existing ability? There’s a clear statistical cure: Measure pre-existing ability to allow an apples-to-apples comparison of people with equal ability but unequal schooling. The cures the Card Consensus prizes, in contrast, are anything but clear. Instead of sending researchers in search of better ability measures, it sends them in search of “quasi-experiments” – naturally-occurring situations that mimic experiments.
As a result, labor economists have collected a zoo of alleged educational quasi-experiments. Some study twins. As long as identical twins have equal ability but unequal educations, education’s true payoff equals their earnings gap divided by their education gap.[vii] Other scholars study the effect of season of birth, on the theory that kids who are young for their grade are less legally eligible to drop out of high school.[viii] Since 2000, researchers have been most transfixed by changes in compulsory attendance laws. If government forces students who would have dropped out to stay in school, what happens to their income after graduation?[ix] While technically impressive, all these papers raise more questions than they answer. To treat changes in compulsory attendance laws as a quasi-experiment, for example, we must assume states change these laws at random – or at least for reasons unrelated to the labor market.
Once a quasi-experimental approach picks up steam, moreover, critics usually uncover deep flaws. Identical twins with different educations don’t have identical ability; the more educated twin is usually the smarter twin.[x] Season of birth is not random; it correlates with health, region, and possibly income.[xi] On closer look, the supposed fruits of U.S. compulsory attendance laws mask unrelated regional trends, especially in the South.[xii] None of this means quasi-experimental studies of the education premium are worthless, or their critics invariably on target.[xiii] But compared to directly measuring pre-existing ability, such studies are speculative and unconvincing. Since the cleanest approach reveals hefty ability bias, and the messy alternatives yield mixed results, we should reject the Card Consensus in favor of the common-sense view that ability bias is all too real.
[i] For a summary, see Card 1999, p.1855. Card’s article currently has over 3,500 citations. See also Card 2001. For approachable reviews, see Angrist and Pischke 2015, pp.209-239, and Oreopoulos and Petronijevic 2013.
[ii] Lindahl and Krueger 2001, p.1106. Alan Krueger and David Card have repeatedly collaborated, but most of their education research is not co-authored.
[iii] Greenstone and Looney 2011, p.5.
[iv] Perhaps most notably, Georgetown’s Center on Education and the Workforce has published a series of policy analyses implicitly setting ability bias at 0%; see especially Carnevale and Rose 2011 and Carnevale et al. 2011. The United States Census does the same; see e.g. Julian and Kominski 2011, 2012.
[v] Card’s 1999, p.1834 otherwise exhaustive literature review explicitly makes this choice: “One strand of literature that I do not consider are studies of the return to schooling that attempt to control for ability using observed test scores.”
[vi] Angrist and Pischke 2015, p.213.
[vii] See Card 1999, pp.1846-1852, and Angrist and Pischke 2015, pp.219-222.
[viii] See Card 1999, pp.1837-1838, and Angrist and Pischke 2015, pp.228-234.
[ix] See Angrist and Pischke 2015, pp.223-227, and Oreopoulos and Salvanes 2011.
[x] Sandewall et al. 2014, Bound and Solon 1999, and Neumark 1999.
[xi] Bound, Jaeger, and Baker 1995, pp.446-447.
[xii] Stephens and Yang 2014, esp. pp.1784-1788. On p.1789, the authors note that quasi-experimental studies of compulsory attendance laws outside the United States detect little or no payoff.
[xiii] Ashenfelter et al. 1999 also discovers signs that quasi-experimental studies reporting larger benefits of education are more likely to be published.
READER COMMENTS
steve
Oct 19 2021 at 9:40am
A lot of money lying around if you are correct. All those kids should skip college. I assume that is what your kids did.
Steve
Christophe Biocca
Oct 19 2021 at 12:40pm
Caplan’s estimate in his book is that ability bias accounts for about 50% of the measured returns to education, but that just lowers the return to getting a degree from incredible to good. Finishing high school is a no-brainer, college is worth it but only if your chances of actually completing it are high enough.
David Youngberg
Oct 19 2021 at 1:40pm
Digging deeper, Caplan argues that the returns on higher ed roughly correlate with student achievement. College is a great deal for great students, mediocre deal for mediocre students, and a terrible deal for terrible students.
Pretty sure the twins (the only two of his four old enough to go to college) are great students.
Jose Pablo
Oct 20 2021 at 8:26am
The money you pay to attend college provides you with your first job. It is an (absurd) prerequisite. There, in your first job, you start learning the ropes of your trade (whatever it is).
Except for a very few cases (medical schools, vets, to some extent engineers) you learn nothing useful in college (and you forget most of the maybe, somehow useful things you learn).
Most people (I would say everybody that has not remained in Academia after college) know and acknowledge that. The very idea that slicing and dicing “data” can have any meaning when they are not supporting (or better yet falsifying) any clearly stated theory of why or how things happen is just “modern day magic”.
College education is a wonderful business: stamping on people’s forehead “employable”. No real responsibility and big (and growing) tag prices. So, you, as a college, can use most of your time to develop your very own style of “wokeness”.
Lant Pritchett
Oct 19 2021 at 9:49am
The snarky “I assume that is what your kids did” means you did not understand Bryan’s point from his book which is that the ex ante returns to attending college are higher for higher ability kids and are likely low, possibly negative, for low ability kids (as the returns to education are largely signaling and hence there are large sheepskin effects from finishing hence starting and not finishing has a really awful rate of return). Having met his children of college age, they are not low ability kids.
robc
Oct 19 2021 at 11:06am
Also, his kids (at least the college age ones) want to pursue one of the specific paths that requires college — they want to be academics.
Jose Pablo
Oct 20 2021 at 8:40am
Bryan’s point from his book is not that you don’t need college. Is that you need college for very different reasons that the ones college business advertises. Basically “signaling”.
Bryan’s theory does a great job explaining many things, for example, the “inflation in college credentials”. And it provides something that Econometrics never gets: a theory of why and how things happen, that can be used to predict and explain observed facts.
Bryan’s theory fully explain my (and all my friend’s) college experience. Human Capital theory does not. No matter what slicing and dicing data “seems” to tell you.
After all, you can make a complicated enough armillary sphere explains all the movements you observe and yet your theory of the Universe can be dramatically wrong.
Knut P. Heen
Oct 19 2021 at 11:08am
University employees doing research on the value of going to university involves a significant agency problem. The temptation to publish positive results and throw negative results in the garbage can is too great for most people.
Jose Pablo
Oct 19 2021 at 7:11pm
“Never ask a barber if you need a haircut.”
Well, you can ask Bryan …
Knut P. Heen
Oct 20 2021 at 5:55am
I said most people. I suppose many agree with Bryan, but says nothing or even argue against him publicly.
Mark Z
Oct 19 2021 at 1:13pm
Card: “One strand of literature that I do not consider are studies of the return to schooling that attempt to control for ability using observed test scores.”
Well, that’s a pretty glaring omission. Test scores are the best evidence we have on cognitive ability. It’s difficult to imagine a good justification for it that doesn’t render the argument against ability bias kind of circular.
robc
Oct 19 2021 at 2:37pm
Return to schooling correlated with SAT scores seems like it would be pretty straight-forward. Honestly, I am surprised College Board hasn’t published it. Or maybe they have.
Mark
Oct 19 2021 at 2:23pm
what did Card say about your observations and criticizing?
Jose Pablo
Oct 19 2021 at 7:08pm
I learn nothing useful to my work in my 8 years attending college. If my 8th year added to my earnings in the marketplace, I cannot even start to imagine the reasons why or how.
Definitely not because I have ever used anything I learned in that last year (or in any of the other 7). Actually, by the end of my first working year I didn’t even remember the name of my last year subjects.
J Mann
Oct 20 2021 at 9:42am
I feel like I learned things in college that were helpful to employment – how to socialize with other people more effectively, how to write (somewhat) more effectively, and a lot of computer related skills from basic computer programming to Excel and Powerpoint. I certainly didn’t learn those skills in anything like an efficient manner, though. Undergraduate academic writing in particular didn’t focus on effectively communicating ideas, but it probably helped me some all the same.
I also got four years older, which helped my maturity.
robc
Oct 20 2021 at 10:55am
You would also have gotten 4 years older while working for 4 years.
The skills you did learn, could they have been learned on a job? Or, since it was taught inefficiently, in a 1 or 2 year program? Possibly part time while also working?
IIRC, Caplan breaks it down to about 80% signaling and 20% skills. I don’t remember the exact numbers, but the point is it isn’t 100% signal.
Matthias
Oct 20 2021 at 11:41am
While the effect has to add up to 100%, there’s no reason why signalling couldn’t be more than 100%.
(Eg if your counterfactual is learning on the job, and let’s assume that you learn better there than in college, and going to college still pays a premium in the job market, then the returns to college could be something like 120% signalling and -20% human capital.)
J Mann
Oct 20 2021 at 5:44pm
Absolutely – sorry for being unclear, but that’s what I meant – I didn’t want to ascribe to college what was caused solely by time.
I think probably yes. The conceit of the liberal arts college is that it’s not just training us for the workforce, it’s training us for maturity or citizenship or something. (This is weakened by the lack of a common curriculum.) Also, it’s a good chance to drink beer and work out and look for romantic partners and play D&D, etc.
If I were going to redesign college to give me what I ended up valuing later in life, more efficiently, I’d stress.
Writing and speech skills. I think these are almost universally valuable. Enough basic math and science to be useful. Maybe a little bit of the humanities to be classy.
Enough of a baseline to maintain flexibility, so near the end of the degree, a student could select a next step and be ready to get a mid level management job, become a computer programmer, or go to graduate school with a year or two of classes.
2 is really the tricky part, IMHO. If at eighteen, I don’t know if I want to be a computer programmer, a pharmacy rep, a surgeon, or an economist, the curriculum has to start out flexible, then specialize enough for me to move on to employment or graduate school. If you want to preserve that flexibility, I think it would be tough to get an undergraduate program under two years, but you could sure teach a lot more in those 3-4 years.
Alternatively, if you could set up one program for 18 year olds who want to be computer programmers and another one for kids who want to be mid-level bank managers and make them pick on their way in, I bet you could get down to two years. (And it would be even better if you stretched out the two years of instruction with some externships.)
J Mann
Oct 20 2021 at 5:47pm
Sorry, I swear my reply was formatted well right until I published it. It should have listed the things I would stress as:
1. Writing and speech skills. I think these are almost universally valuable. Enough basic math and science to be useful. Maybe a little bit of the humanities to be classy.
2. Enough of a baseline to maintain flexibility, so near the end of the degree, a student could select a next step and be ready to get a mid level management job, become a computer programmer, or go to graduate school with a year or two of classes.
J Mann
Oct 20 2021 at 5:48pm
Ok, this time I used the numbered list function in the header and it still stripped out the numbers. (sigh).
There should be a number 1 before the word “Writing” and a number 2 before the word “Enough.”
[I’ve fixed it for you in your last comment.–Econlib Ed.]
Miguel Madeira
Oct 22 2021 at 7:59am
“Straightforward rebuttal: Name any ability the well-educated tend to lack. ”
At least, the stereotypes for well-educated males are: social skills, physical strength, practical/common sense.
And I suppose that a difference in physical strength between well-educated and low-educated will be even more if we don’t control for sex (I suspect the main reason because women are the majority in college students is because they have less physical strength, then low-educated women have less career option than low-edicated men).
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