Those Overeducated Ethiopians
Bryan Caplan argues that the fact so many kids in the developing world don't go to school proves that education isn't very valuable.
Matthew Yglesias tweets that “Bryan Caplan holds some impressively extreme views.”
Figuring that the accompanying link was to an example of an academic economist making a purely academic argument, I instead discovered what was indeed an extreme view.
The other day, Tyler Cowen challenged me to name any country that I consider under-educated. None came to mind. While there may be a country on earth where government doesn’t on net subsidize education, I don’t know of any.
On the surface, my failure to answer Tyler’s question seems like an outgrowth of my peculiar devotion to the signaling model of education. But economically literate libertarians should almost automatically agree with me even if they don’t take signaling seriously. Education’s a good like any other. If people refuse to spend their own money for more education, then it’s presumably just not worth it, right? This is especially clear because governments habitually subsidize education. Libertarians should believe that there’s an oversupply of education for the same reason they believe there’s an oversupply of sport stadiums: The status quo is desperately dependent on government funding.
Note further: This analysis holds in the Third World as well as the First. The fact that Nigerians and Bolivians don’t spend more of their hard-earned money on education is a solid free-market reason to conclude that additional education would be a waste of their money.
And, I suppose, the fact that poor people are starving is proof that they’re not all that hungry?
Lots of Nigerians and Bolivians flock to the United States and other developed countries for higher education. Even at lowly Jacksonville State, I had Nigerian students in my classes. Rich Nigerians. Their illiterate countrymen aren’t spending more of their hard-earned money on education because they’re wasting it on food, not because they think they’re better off uneducated.
Cowen, no lover of the nanny state he, notes that structural factors are also at work.
If I think of the Mexican village where I have done field work, the education sector “works” as follows. No one in the village is capable of teaching writing, reading, and arithmetic. A paid outsider is supposed to man the school, but very often that person never appears, even though he continues to be paid. Children do have enough leisure time to take in schooling, when it is available. I am told that most of the teachers are bad, when they do appear. You can get your children (somewhat) educated by leaving the village altogether, and of course some people do this. In the last ten years, satellite television suddenly has become the major educator in the village, helping the villagers learn Spanish (Nahuatl is the indigenous language), history, world affairs, some science from nature shows, and telenovela customs. The villagers seem eager to learn, now that it is possible.
That scenario is only one data point but it is very different than the “demonstrated preference” model which Bryan is suggesting. Bolivia and Nigeria are much poorer countries yet and they have dysfunctional educational sectors as well, especially in rural areas. Bad roads are a major problem for “school choice” in these regions, just as they are a major problem for the importation of teachers.
A simple model is that underinvestment in infrastructure results in a high shadow value for marginal increments of education. Model = high fixed costs, liquidity constraints if you wish, high shadow values for lots of goods and services, toss in social externalities to raise the size of the distortion.
Now, I happen to agree with much of Caplan’s arguments on the signaling model. That is, a lot of the “value” of jumping through the hoops and getting into elite schools, getting good grades there, and so forth comes from the fact that prospective employers take having accomplished these as proxies for other things. His ratio of 80% of the value coming from signaling and only 20% from “genuine skill acquisition” seems high, but there’s no denying that the phenomenon exists. Or even that it’s not a particularly good proxy for the things employers want!
But it’s absurd to argue that phenomenally poor people’s not spending their limited funds on education adds additional proof to the theory.