Trying to explain the American academic jobs market

Something's clearly not right about the academic jobs market in the US. The actual process of applying for a job seems to take forever and as one of the more recent Nobel Prizes pointed out such search frictions and inefficiencies do prevent markets from clearing. This is, you know, a bad thing. Further, we've got the fact that American academia is pumping out huge numbers of Ph.Ds who then can't find jobs as tenured professors: but also can't find them elsewhere in the economy as the only thing they've really been trained to do is to try and become tenured professors. They thus end up trying to survive on less than minimum wage as adjunct professors.

So this isn't what we might want to hold up as an example of a successful part of the jobs market. But the question then becomes, well, why is it like this? What's gone wrong?

One possible answer being that this is what happens when you let the left wingers try to run a market. It's not actually much of a surprise to anyone, or at least it shouldn't be, that the US professoriate runs largely leftish. 90% to 10 D to R is the usual number bandied about. It also wouldn't be a surprise to find out that those who do the academic administration tend further left than that: there does have to be an explanation for the various diversity policies around the place.

The end result being extraordinarily strong union protections (that tenure means that, roughly, absent raping the Dean in his office no professor can get fired), vast overtraining of would be market entrants and the majority not actually being able, they being excluded from those union protections, to gain a living. Oh, and the end product becoming ever more expensive as the providers layer themselves with ever more orgies of bureaucracy.

Sounds just wonderful really: or perhaps we might want to use it as a warning. This probably isn't the way that we want the entire jobs market to work so let's not attempt to add more of those job protections, unionisation and so on.

So the State schools can't manage to teach the kiddies to read then, eh?

So here's a little fining that adds to the shine of our glorious state. Despite the fact that we spend some 5% of all of the value created in the country on education each year that glorious state school system can't actually manage to teach the kiddies to read:

The fear that 1.5 million British children will reach the age of 11 unable to "read well" by 2025 has prompted the launch on Monday of a new campaign backed by a coalition of businesses, charities, bestselling authors and teaching professionals.

The Read On. Get On campaign is aimed at making a radical improvement in reading standards one of the central goals of politics and education in the next decade. It is being spearheaded by Save the Children, the CBI and the Teach First charity and is unusual in the diversity of its supporters – they include authors JK Rowling and Michael Morpurgo plus a host of book publishers, the Sun newspaper and the Premier League.

One aim is to get the main political parties to include in their 2015 manifestos a commitment to improving the reading of the most disadvantaged.

So let's attempt to draft something for the manifesto of any party that wishes to pick it up shall we?

How about: "Schools that do not manage to teach children to read within a year of that child's entry to that school will be closed and all of the teachers fired"?

Or perhaps "Schools will teach children the value of self-structured play after they have taught them to read"?

Possibly even: "No teacher will receive a teaching qualification until they have demonstrated that they can teach a 5 year old to read"? With the obvious proviso that all of those who currently have a teaching cert must prove this over the next school holiday?

Something needs to be done after all: that education system does get 5% of everything and the State does claim a rightful monopoly on education (sure, they let a few slip away but they still claim that they should be educating everyone). So why on earth are we letting them get away with not performing their most basic duty?

After all, the Church schools of more than a century ago managed it, why can't "highly trained well resourced professionals" manage it? Education systems in other countries, many of which get considerably less money, also manage it.

Could it, possibly, just maybe, be because the current school system just isn't very well run?

Explaining the success of the Finnish education system

It's a standard enough trope: the Finnish education system does very well so our education system should be just like the Finnish one. Meaning comprehensives for all and put the private education system to death. That is, of course, attractive to those who have been arguing for decades that we should put the private sector education system to death and have comprehensives for all. There's an interesting new paper arguing that it really might not be all that simple:

Finland has been noted to perform consistently very well in the international PISA assessments for many years, but it also has a relatively low per capita number of Nobel Prize winners. We draw upon a large body of proxy data and direct evidence, including the first ever use of RTs to calculate the Finnish IQ and the first ever use of the WAIS IV and PISA scores in the same capacity. Based on these data, we hypothesize that Finns perform so consistently well in PISA because they have a higher IQ overall than other European countries and exhibit a specialized slow life history strategy characterized by high Agreeableness and Conscientiousness, and low Psychoticism and Extraversion. Most of these traits predict educational success but all would suppress genius and creativity amongst this population.

If Finnish children are both brighter than those in other countries and also the culture itself supports conscientious hard work then yes, we might well think that that has an impact upon the success of the education system.

Increasing access to private education will add billions to growth

• The UK’s average annual growth rate between 1960 and 2007 would have been almost 1 percentage point higher had it matched the Netherlands' long-term level of independent school enrolment since 1960. This in turn means that UK GDP per capita would have been over £5,800 higher in 2007 than it was.

• Better education boosts economic growth; improving students’ international test scores by 10% raises a country's average annual growth rate by 0.85 percentage points.

• UK GDP per capita would have been almost £5,300 higher in 2007 had it performed as well as Taiwan since the mid-twentieth century.

Britain could add billions of pounds to long-term economic growth if it increased access to private education, a new report released today (Tuesday July 29th) by the free-market Adam Smith Institute has found.

The report, “Incentive to Invest: How education affects economic growth”, illustrates how higher educational achievement boosts long-term economic growth, and the important role of private schooling in this process.

Through the use of existing research and new quantitative evidence, the author of the report, Gabriel Heller Sahlgren, establishes that test scores are closely related to growth. Lifting achievement by 10% hikes a country’s average annual growth by 0.85 percentage points.

Furthermore, the report illustrates how competition from independent schools has proven successful in generating higher international test scores, while also driving costs down. Sending 20 percentage points more 15 year olds to independent schools would raise growth by 0.4pp—or about a sixth—via its positive effect on educational achievement.

Based on his findings, Heller Sahlgren calls for the government to radically reform education policy by encouraging more privatisation and competition in the education sector.

Had the UK matched the Netherlands’ long-term level of independent school enrolment since 1960, its GDP per capita would be over £5,800 higher today, the report argues. At a time when policymakers are trying to cement and broaden the economic recovery, the report suggests that expansion of access to private schooling would be an attractive component of a long-term growth strategy.

Commenting on the report, its author Gabriel Heller Sahlgren said:

My research shows that a focus on increasing the number of pupils taking higher qualifications is misguided. There’s in fact no robust impact of average schooling years in the population on economic growth on average.

On the other hand, education quality, proxied by international test scores, has a consistent and strong effect on growth. According to my calculations, the UK’s real GDP per capita in 2007 would have been over £5,000 higher had we performed on par with Taiwan since the mid-20th century. So the dividend of improving children’s attainment is large indeed.

Yet there are different ways to do achieve this. Unlike expensive resource-driven education reforms, which are rarely cost effective, a good option is to raise the level of independent school competition, which other research shows both increases international test scores as well as decreases costs.

According to my calculations, the indirect economic benefit, via higher achievement, of increasing the number of pupils in independent schools to the Netherlands’ level would be a 0.92 percentage point higher long run GDP per capita growth rate. The government should therefore continue their market-based reforms on education and expand choice as widely as possible.

Sam Bowman, Research Director of the Institute, said:

This report shows that we need greater access to private schooling for all pupils regardless of background, not just to improve the welfare of the children themselves but to boost the UK’s overall standard of living and long-term economic growth.

Expanded access to private education through school vouchers and a revival of the assisted places scheme may be an easy, low cost way for the government to boost growth by improving the human capital of British workers. The results may take some time to materialize but studies like this show just how valuable a long-term strategy for expanding access to private schools could be.

Click here to read “Incentive to Invest: How education affects economic growth”.

For further comments or to arrange an interview, contact Kate Andrews, Communications Manager, at kate@old.adamsmith.org / 07584 778207.

Remind us again why government should run all the schools

This story might cause a little pause for thought:

One of the most vivid arithmetic failings displayed by Americans occurred in the early 1980s, when the A&W restaurant chain released a new hamburger to rival the McDonald’s Quarter Pounder. With a third-pound of beef, the A&W burger had more meat than the Quarter Pounder; in taste tests, customers preferred A&W’s burger. And it was less expensive. A lavish A&W television and radio marketing campaign cited these benefits. Yet instead of leaping at the great value, customers snubbed it.

Only when the company held customer focus groups did it become clear why. The Third Pounder presented the American public with a test in fractions. And we failed. Misunderstanding the value of one-third, customers believed they were being overcharged. Why, they asked the researchers, should they pay the same amount for a third of a pound of meat as they did for a quarter-pound of meat at McDonald’s. The “4” in “¼,” larger than the “3” in “⅓,” led them astray.

That story's too good to want to check if it's actually true or not. But if it is then why would we continue with an education system that has had more than a century to try to get things right but has manifestly failed to do so?

Quite, Gove and others are onto the right sort of policy, freeing the education system as much as possible from that dead hand of said state.

This is rather the point of student loans though

Hugh Muir gets all upset about what is happening over student loans. The repayment numbers are sinking through the floor so what's the point of the new system. And furthermore:

There is simple economics here; too many graduates chasing too few jobs in a labour market slimmed down by government austerity measures. Many who have taken out the loans can't find jobs, so they don't pay; but those who do find employment are paid so little in an over-supplied market that they don't reach the threshold at which they have to pay.

All of which is rather missing that this is part of the point of having people paying directly for their university educations.

We want them to think about whether spending three years of their life and also £27,000 is a good thing for them to be doing, And the more people realise that perhaps it isn't then the happier all should be.

Don't forget that the total cost of the system as a whole hasn't changed very much. All that is different is who is getting the sticker shock. And that's actually what we want to be happening: is a university education a good deal for those who go and get one? It's is now those who are thinking about getting one who face the prices: they can thus work out for themselves whether it's a good idea.

The answer is that sciences at a good place definitely are (assuming you finish) and arts and ologies at bad places almost certainly aren't. And the only way that anyone's ever going to be able to make a decision like this is by seeing the costs which they can compare to the benefits.

Which is, of course, why the system was changed in the first place.

Yes Polly, training the untrained is indeed expensive

Polly Toynbee tells of us of a marvellous scheme by which the young and untrained get trained and thus gain decent employment. However, the real message of this story is not quite what Polly thinks it is I fear:

The shadow work and pensions secretary, Rachel Reeves, and Stephen Timms, the shadow employment minister, were in Cardiff this week to study it, as they plan their own similar job guarantee scheme. They visited Sapiens, an international software company that has taken on 12 trainees from Jobs Growth Wales. All these young IT graduates were lost temping in part-time, low-level jobs. One had been stuck working part-time in a bingo hall for a year, others in shops and pubs, each applying for hundreds of jobs without getting interviews: "Everyone wanted people with experience. If you haven't any, you've no hope," said one. The company said it would never have hired these 12 without the programme, because training raw recruits costs so much more than taking on experienced staff. But with Jobs Growth Wales covering six months of intensive training, Sapiens ended up keeping 11 of them permanently.

You can indeed read it the way that Polly does, the Glorious State taking over and making things better where the market simply bumbles ineffectually.

Or one could try to look a little deeper. For example, all of these "young IT graduates" had been in compulsory education for 11 years of their lives, presumably an additional two to get into university and then three once there. So what the hell is our State run education system managing to do over those 16 years if it cannot prepare them for an entry level job opportunity?

The second and more major point is that yes indeed, it does cost money to train people. And the cost of that training can indeed mean that people would prefer to hire the already trained. Which is why it is so stupid to put a minimum price on untrained labour. For that pushes the total costs of untrained labour, wages and training costs, above the costs of hiring someone who already has their act together.

That is, a minimum wage will, if it is high enough to actually matter at all, will by definition be crippling to the employment prospects of the young and untrained.

As Britmouse so graphically points out here.

Perhaps instead of adding another layer of State interference we sould undo the cause of the original problem?

Edapt in Education

Michael Gove's battle against  "the blob" rumbles on. Not only is he in the firing line over Ofsted appointments, but the NUT is set to announce the date for more teaching strikes on Friday. Cue the cheers of solidarity from some sources, and lofty dismissals of leftist militarism from others.

Though the saint-sinner dichotomy makes for easy reporting, the real relationship between teachers, politics and the unions is more interesting. Despite falling membership across other sectors, teaching remains a highly unionized profession. Teachers also report high levels of satisfaction with their union experience. Despite this, turnout for voting on industrial action is often low, and 44% teachers told a LKMco study that the right to strike isn't important to them.

Instead, the most frequently-given reason by teachers for union membership is access to legal advice and support. With 1 in 4 teachers experiencing a false allegation at some point in their career, the expertise and advice a union offers in times of dispute is also cited as the most valuable service they provide.

Given the structure of employment law and the difficult nature of dealing with children, it is no wonder that teachers value this support. However, there's no reason why affordable expert advice should have to be bundled with a political agenda. Indeed, a quarter of teachers said that they'd rather not belong to a union if a good alternative existed. At a CMRE seminar last week John Roberts outlined the model of his company Edapt, a for-profit, teaching union alternative established in 2011. Edapt offers the legal advice and representation teachers seek, without engagement in political bargaining and lobbying. Instead of trading blows with governments they can focus on delivering quality employment support to their members. Many members approached Edpat with a pre-existing issue and unsatisfied with their union's response, whilst Roberts boasts of Edapt's 99% satisfaction rate.

Obvioulsly, this model would not be for everyone. Many teachers still consider collective bargaining an essential tool, and Edapt is small fry compared to the unions. Not all teachers are comfortable playing politics, however, and inter-union competition for members can encourage more politically aggressive strategies. Recent strikes have polarised teachers, with Edapt growing most quickly around times of industrial action. Further strike action could lead to another surge of teachers uncomfortable or simply exasperated with their union's actions.

No matter what causes people to join Edapt, political neutrality is crucial for its long-term success. It's ironic that eschewing sector politics can look ideological, but a 'non-union' is easily seen as an 'anti-union'. Gove might have made this mistake himself in inviting Edapt to reform discussions last year. And, tellingly, his endorsement of the Edapt as a ‘wonderful organization’ actively lost them members.

Time will tell just how successful union alternatives can be. If Edapt can prove that it isn't ideologically driven and its focus is right, the model might have relevance in other sectors and across countries. With only 25% UK workforce unionised, there might be scope to offer services to people who wouldn't have considered joining a union. Either way, with 48 hours of tube strikes starting tonight, I bet TfL wishes that there were more union alternatives within public transport.

Well, yes, markets do work you know

It would appear that the fact that markets do in fact work is getting through even into our educations system. For which, of course, great thanks and hurrah!

Parents who move house and shell out for private tutors are paying as much for their child's education as those who send them to private school, says a top headmaster.

The cost of a good education is the cost of a good education. And we're two, maybe three, possible methods of achieving that aim.

The first is simply to gird the loins and go and pay for one out of post tax income. We can see the money going out for that and boy, doesn't it sting.

The second is to move to an area where the State, remarkably, is actually able to provide a good education out of those taxes already paid. But such areas have higher house prices (it's very noticeable indeed that house prices, the prices of houses that people with children might like to live in, vary by school catchment area) and thus more must be paid for a house in such areas. We can still see the money rolling out here and boy, doesn't it sting.

The third is of course home schooling. In which case we don't see the money rolling out: but we do rather see it not rolling in as one of the possible two household incomes is likely to be sacrificed to produce it. Given that there's no tax wedge here this might in fact be the cheapest option.

However, all three are substitutes for each other and there's really no surprise at all that close substitutes have roughly the same price. Because, you know, markets work and close substitutes tend to converge in price.

In praise of those complaining economics students

I've rather changed my mind about those economics students up north revolting (no, they are having a revolt, they are not revolting in themselves) over the curriculum they are being forced to study. I don't in the least take seriously their complainty that they're not being taught Keynes for I've read their syllabus and they are. But in a more general view I think I am converted to their cause. As Peter Boettke points out:

This observation is nothing new. It can actually be found in Adam Smith’s The Wealth of Nations. Smith discusses the differences in approach to the teaching found in Glasgow and Oxford, respectively. Professors in Glasgow were paid through direct student fees, and thus they devoted more time to teaching their students, whereas the professors in Oxford were paid from an endowment, and so did not pay attention to the students in the least.

Given that the students are, through their loans, paying for their own education then yes, they should indeed be taught those parts of the subject that they desire to be taught in the manner that they wish. I do also have a feeling that exactly that paying for their own education is going to lead to their wanting ever more of that highly mathematical modelling as a result: for that is what will get them the jobs in hte merchant banks to pay off those loans. But it is indeed their money and they should not only be allowed, but encouraged, to spend it as they wish.

This is, after all, one of the things that we do try to encourage in the understanding of economics, that people spending their own money on their own desires works better, most of the time, than any other possible system.

One possible confusion though at the end of all of this. If they do get taught the economics they desire to be taught, in the manner they so desire, and then they cannot find jobs at the end of it all, will this be seen as a failure of market economics or a failure of the planned system of what students ought to be taught? And given that the students are demanding to be taught much more about alternatives to markets, about market failures, will they take their own market demands as having been the thing at fault?