Thursday, April 29, 2010

Income inequality

Here's a good blog post from the great Gary Becker about why there's so much inequality in the US these days and what can be done about it. I like that he finds a solution, or at least the beginning of a solution, that would make the country both more prosperous and more equal. In many cases policymakers need to choose between equality and efficiency. This trade-off is famous in economics.


  1. Re: Becker's solution to dropout rates-- This article reports some recent findings showing that charter schools do not do better in the aggregate than comparable public schools. ( Some do better, some do worse, and some are roughly equal. I think some on the right are too quick to point to school choice, charter schools, etc. as an easy fix to education.
    The data suggest a more measured approach-- use charter schools as a way of discovering and disseminating proven teaching techniques, and weeding out inferior methods. The existence of market forces alone may not be enough-- we might also need some governmental support to research and propagate best standards.

  2. Even if it were true that charters schools don't raise scores more on average, they may do good in another way: They compete with the regular schools and cause them to improve. So, the charter schools/school choice can raise the overall quality of education in the country. See:

    Moreover, it's possible that charter schools can do the same job as regular public schools, but more cheaply. I've heard this claim about private schools.

    I don't think charter schools or school choice is a magic bullet, but I think they can do a lot of good.

    One fear is that these social problems are largely cultural. And it can be hard to legislate culture. Daniel Patrick Moynihan was a little more optmistic, but I don't know if there is any evidence for his claims: "The central conservative truth is that it is culture, not politics, that determines the success of a society. The central liberal truth is that politics can change a culture and save it from itself."

  3. Thanks for the NBER study. It shows that for North Carolina schools competition is correlated with statistically significant improvements in public school test scores. These results weren't replicated in a Michigan study, however, suggesting that the effect might not be very widespread. If you can't access the study, let me know and I can send you a pdf.

    The study also *may* help with your second point, that charter schools can be more cost-effective. The reason is that the effects from competition are larger than those from lowering student-teacher ratio. But the latter effect may not be, according to my education expert (Kirby), statistically significant, which undermines the claim of cost-effectiveness.

    Re: politics and culture-- I don't really like the Moynihan quote. The culture/politics dichotomy is far too artificial to do any work. And even if it weren't, it'd be a pretty constricted conservatism. Can't politics influence culture and thus benefit (if not save) society? We don't 'legislate' culture, but we can certainly influence it politically without being 'liberal.'

  4. Thanks for the response.

    I'm a little confused by the wording of your second paragraph. You are saying that the student-teacher ratio effect may not be statistically significant, right? It's possibly Kirby is referring to this study (the one by Duflo, Dupas, and Kremer):

    Yeah, the Moynihan quote sounds smart at first, but then you realize it's a pretty big oversimplification. Anyway, I'm not against legislating culture in principle, but in practice I'm not sure how much I trust modern legislators (or maybe any legislators) make such legislation. I lean towards getting the government out of the way for the most part and allowing culture to come from the private sector. Some people say the laissez-faire religion policy has been better for religion in the US than state-run religion policy has been for religion in Europe. This is another reason I like private schools. I'm ok with indoctrination, but I don't know if I trust the school boards to indoctrinate people with the right doctrines. :)

  5. Yes, decreasing student teacher ratio may not be a statistically significant influence on test results.

    Re: your second post. I agree that there can be a temptation to rely too much on the data, which we both agree are limited-- we might not be able to measure what we need to, and even if we can the results from one area might not apply to other areas.

    One point about the school choice debate that strikes me as important but often ignored: parents do NOT respond effectively to signals of school effectiveness. Often they will leave kids in schools in which they are performing horribly academically because they feel the kids are getting more discipline (ah, a cultural problem!), or because the charter school has more prestige than the regular public school (another cultural problem). It's fine to extol the benefits of a market for school choice as long as you acknowledge the limitations and possible downsides.