Editor’s note: Every Monday, the National Bureau of Economic Research (NBER) releases new “working papers” from leading teams of economic researchers from around the world. The NBER will publish hundreds of these working papers every year. These items usually haven’t been published elsewhere, have not yet been fully peer-reviewed, and reflect brand new research. As such, they represent the most cutting-edge findings in the economic literature. Applied economist Lyman Stone will be writing a regular column on E21 summarizing the most interesting findings from these works. He also posts reviews of these papers on Twitter every Monday under the hashtag #NBERday.
Schooling: Selective, Good, Expensive, Remedial, and at Home
Your exceptionally bright kid applied to two universities: the University of Michigan and Yale. She was accepted to both schools. Which one is better for her future?
New research, based on a massive, remarkable longitudinal dataset with plausible quasi-experimental variation allowing researchers to estimate the causal impact of specific universities, suggests that… it depends! The researchers followed 8,000 young adults over 20 years and compared the life outcomes of those who went to moderately selective schools versus those who went to highly selective schools. If you have a son, it doesn’t matter where he goes. Once you control for characteristics like test scores, college admittances, and parents’ education, male students are just as well off at the University of Michigan as at Yale. Their life outcomes (income, employment, marital odds) were, economically speaking, determined before they made their college decision. As long as they go to any moderately-selective school, their careers will be fine. In other words, don’t overspend on Yale!
But for your daughter, it’s a different story. Going to a more selective school really will change your daughter’s life! If she gets into Yale or Michigan, she should go to—well, it still depends. If she goes to Yale, it will likely increase her income, perhaps by as much as 14 percent! However, going to Yale also means that she increases her odds of being unmarried by the time she’s forty by 16 percent. Moreover, the only way Yale increases your daughter’s income is if she says “I do.” If your daughter doesn’t get married, she’d be just as well off at Michigan in terms of earning potential. In other words, think of Yale as a very expensive dating app. The research suggests women at the super-selective Yales of the world tend to marry men who support their career ambitions. This may be what your daughter wants, but she should be aware that this high-selectivity model actually reduces her odds of getting married at all and having kids. Going to a school like Yale instead of one like the University of Michigan is equivalent to reducing her odds of marriage by age 40 from about 75 percent to about 50 percent.
While “highly selective” universities probably won’t do much to actually help your kids, good high schools might. New research using longitudinal data from Trinidad and Tobago suggests that what high school your kid goes to may matter a lot for his life, and that parents may have a good sense for how it matters. Researchers found that parents reliably expressed a higher preference for sending their sons to a list of schools associated with reducing the odds a boy gets arrested by age 25 and their daughters to a set of schools associated with reducing the odds of teen pregnancy.
Why does this matter? It suggests parents, at least in Trinidad and Tobago, might have a good nose for schools that are good. Some economic research has suggested parents have reputation biases for or against certain schools; this research implies parents might not be crazy for having such biases. More to the point, the researchers found that the causal effect of schools on test scores is not the same as the causal effect on other outcomes, like crime, teen pregnancy, or employment later in life. In other words, when economists measure the “value added” for a school by looking at test scores, they may be missing the outcomes that parents actually care about when choosing a school.
There was a flurry of other education papers, too.
One showed that it costs tons more to educate one electrical engineering student than it does to educate one mathematics student at a university. Indeed, cost of education varies widely across majors. An implication of this work is that we should maybe charge higher tuition for some majors than for others.
Another new paper worked on a longstanding problem: why don’t poor kids with good grades, who would be eligible for huge financial aid packages, even bother applying to selective colleges? The researchers conducted an experiment. They convinced the University of Michigan to make an ironclad promise to low-income, high-achieving students who would already be eligible for 90% tuition scholarships that, if admitted, Michigan would give them a full ride, and they didn’t have to worry about filling out a FAFSA (the annoyingly long federal financial aid form). The researchers then launched an advertising campaign targeting some of these students to make sure that they knew about the program. The ad campaign worked. Telling smart-but-poor kids that they have guaranteed free tuition at a good college doubles how many will apply to that school, and increases the share who go to any higher education by about 30 percent. That’s a huge effect. However, it’s not surprising. Offer smart poor kids free college and, yeah, you’ll get increased enrollment!
But aside from free tuition and targeted advertising, is there any other way to help disadvantaged kids? Well, Israel tried something interesting: the country launched a program to help underperforming kids cram in extra studying and classes before their final graduation exams. The program was rolled out in some communities but not others, so the researchers compared the life outcomes of students in several schools that received the remedial coursework with those in schools that didn’t. And 20 years down the road, kids who got the remedial coursework had higher incomes than similar kids who didn’t. In other words, helping kids cram for the test can have positive life-long effects! Procrastinators everywhere can rejoice. When they get around to it.
Finally, for one interesting paper, researchers created a fake set of profiles of babysitters and nannies with systematically varying characteristics: different prices were listed, education and experience levels varied, as did car ownership and availability. Then, the researchers put those profiles on a large online childcare website, and recorded how many parents made inquiries to hire the fake babysitters. In all, they found that parents are willing to pay much more for babysitters with more degrees, with more experience, and with a car. This is interesting market research, but the paper goes on to suggest that childcare quality might be meaningfully measured by having a degree or more experience, even though the researchers did not find evidence for that specific effect. Rather, they offered the idea that parents value these characteristics enough that states and localities might be justified in increasing the regulation of childcare, as Washington DC has done by requiring pre-K teachers to have childcare-related degrees. Of course, there actually isn’t much evidence that babysitter quality, as measured by experience or education, impacts a pre-school-aged child’s life very much—certainly not enough to justify paying the $25 per hour some of the fake babysitting profiles were charging. Whatever parents may want in a babysitter or nanny, the reality is that new quality-focused regulations will do more harm than good, driving up the cost of basic childcare for many families, while yielding vague and possibly nonexistent quality improvements to a few.
Odds & Ends
Aside from these education and child development topics, there was a grab-bag of other interesting research.
One paper found that states with earlier or more severe unemployment spikes during the Great Recession also saw more claims filed for Social Security Disability Insurance. Those increased claims were more likely to be rejected as invalid, and those that were valid were less likely to be valid for purely medical reasons, but rather for a combination of limited medical disability and non-transferrable skills. In other words, unemployed people during the Great Recession seemed to treat the SSDI system as a cyclical income-support system, rather than what most people imagine it to be, a lifeline for the handicapped and severely disabled.
Another paper looked at death rates from infectious disease in U.S. cities from 1900 to 1950. What the researchers found was striking. Disease death rates were similar around the country once you control for age and race. But, crucially, African Americans had vastly higher rates of death from infectious diseases. During the 1918 flu pandemic, which killed as many people as the entire First World War, white death rates spiked… to about the levels that African Americans experienced all the time. Disease death rates among pre-WWII African Americans were at a permanent crisis level. To the extent that improvements in medical care have brought white and nonwhite disease burdens to more similar levels, then those innovations would serve not just to extend the lifespan of nonwhites, but also increase the nonwhite share of the U.S. population. Some conservatives worry about demographic change, and look to immigration as the source: but another factor behind demographic change during the 20th century may simply be better medical care, especially for minorities—which is something to celebrate.
Speaking of immigration, yet another in a long line of studies has found that immigration is not associated with wage declines. In this case, when Switzerland implemented totally open borders with all of its neighboring countries in a gradual process from 1999 to 2007, the result was a huge increase in competition for jobs in the entire country and for higher-skilled workers. However, Swiss employment did not fall: it rose slightly! Wages overall were about flat, but the wages of the people facing the most new labor competition, high-skilled workers confronting new labor supply from Germany and France, saw their wages rise appreciably. It turns out that with more workers available, Swiss companies were able to expand their business and sales, even as local companies saw a boom in business.
That’s the NBER roundup for this week. Next week, we’ll have a new batch of papers.
Lyman Stone is an economist who specializes in regional development and demographics. He is also an Advisor at Demographic Intelligence, a Senior Contributor at The Federalist, and a Research Fellow at the Institute for Family Studies. He and his wife Ruth currently live in Hong Kong, where they serve as missionaries in the Lutheran Church.
Interested in real economic insights? Want to stay ahead of the competition? Each weekday morning, e21 delivers a short email that includes e21 exclusive commentaries and the latest market news and updates from Washington. Sign up for the e21 Morning eBrief.