Wednesday, October 1, 2014

Returns to unwanted education

In my inequality post, I wrote, somewhat speculatively,
The returns to education chosen and worked hard for are not necessarily replicated in education subsidized or forced.
Marginal Revolution points to a nice new paper by Pierre Mouganie making this point. From the abstract:
In 1997, the French government put into effect a law that permanently exempted young French male citizens born after Jan 1, 1979 from mandatory military service while still requiring those born before that cutoff date to serve. ... conscription eligibility induces a significant increase in years of education, which is consistent with conscription avoidance behavior. However, this increased education does not result in either an increase in graduation rates, or in employment and wages. Additional evidence shows conscription has no direct effect on earnings, suggesting that the returns to education induced by this policy was zero.


  1. Quick question perhaps someone can clear this up for me. So having education subsidized or not affects a person’s decision whether or not to enroll in college. But there is always a variety of reasons for and against more education that a person must navigate and arrive at a decision. My decision to go to college was based on the fact that is was hugely subsidized by my parents. I responded to that incentive and a variety of other ones. So my question is what’s special about this particular incentive to choose school? What’s special about a government subsidy for school? Which incentives cause me to not work hard for my education and thus find it less likely to generate a worthwhile return? And which do? And why?

    1. Drew,
      If you went to college just because your parents pushed you and you felt guilty; maybe you should not go there to begin with. Not everyone needs to go to college. Maybe you would find your calling as a carpenter or car mechanic. Maybe you needed to be a laborer for a few years in order to mature to the point of understanding the need and importance of college education.

      In general, I am against the subsidized college education.

      I attended college in Poland in 1970s. A good socialistic system gave me tuition free education. During my college years I wrote to student publications, and discussions about improving the college education system was permanently on the agenda. Seeing inefficiencies of the system, I arrived with the conclusion that they can be only eliminated by making Universities for profit enterprises, charging tuition.

  2. I don't have enough data to comment on your statement, but I'm not sure that this article is illustrative in any way. Young men who are enrolled in college (or have not finished high school) can postpone their mandatory service. That creates incentive to prolong education, not necessarily to get more education. So, those men are more likely to repeat a year as many times as permissible by law, or to enroll in program they have no interest for, and to do the minimum to keep their eligibility. Free and forced education have different sets of incentives. Forced education forces people to finish some level of education, while free education gives people the ability to chose whatever they want. First group tries to finish their required degree as soon as possible, while second one has interest in finishing their elected degree. Quite different from potential conscripts, who just want to remain in the system as long as possible.
    I wouldn't be surprised to see negative effect of additional education on potential conscripts, since they are men who otherwise had no interest in further education, so they are forced to spend some time complying with minimum requirements to continue being in the system, instead of joining workforce, as they would do if they didn't face conscription. Those who were going to continue education anyways now have the incentive to prolong it, often not by getting more education (higher degree), but by spending more time getting the same degree, which should also negatively impact their future earnings (they join workforce later, but with same knowledge; their CV is less impressive).

  3. Is there something to be said for subsidizing college education if it enables those of special talent from lower income sections of society to go to college and then achieve something that is very valuable (potentially revolutionary) for society? This may be just one student out of a hundred who are subsidized and hence the return in education would not be reflected in earnings as you mention when you take the average. In terms of adding value to society, this would not be the same as subsidizing cars for example, although cars also add value to society. This is because cars get better with time. Lets assume there's a poor student who can't afford both college or a car. It takes a generation or two for this family to be able to afford a college and a car. We can be fairly certain that for a poor student today who is not able to afford a car, the cars that will exist in his son's or grandson's time will be better than the ones today. However it is far less likely that his son or grandson is as talented as him in that particular field. So even if his son and grandson do end up going to college, which although a good thing, may not be as useful to society.

    For example- the author of the Indian Constitution was from one of the most backward sections of society. As a young man his intellect was noticed and he won a state scholarship from his State Government in India to pursue an education at Columbia, an opportunity which would have otherwise been impossible for him. His education at Columbia would transform him giving him a deep appreciation for individual rights and freedom. Years later when he wrote the Constitution of India his time in America deeply influenced him. Its not an accident of fate that India unlike so many other Asian countries enjoy political freedom and a robust democracy. But would his son or grandson been able to do the same?

  4. I also should have said that the free market makes cars better with time. I didn't mean to say its a guarantee. But subsidizing education for prodigies who can't afford the the best colleges is possibly different.


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