The College Premium

The everyone-should-attend-college camp often cites the “college premium” — people with college degrees make a lot more money in life than those who do not.

In his recent Econtalk interview, Bryan Caplan adds interesting nuance to this claim. The most important takeaways, in my own words:

  • An average college grad makes 83% more money in an average year than an average high school grad.
  • Folks with some college (who don’t graduate) make on average 10% more than high school grads.
  • Why is there such a premium? The usual story points to the value of the college education itself. Bryan sooner points to the kind of people who attend college.
  • There’s a big difference at the starting point of college. Those who sign up to go to college are, at the outset, going to have higher IQs and an accumulation of other initial advantages than those who choose not to sign up. It stands to reason that those inclined to sign up were going to succeed either way — it has less to do with what they actually learn in school.
  • The 5-year graduation rate for a 4-year college degree (i.e., giving someone five years to graduate) is roughly 55%. In other words, almost half of people who start college do not finish.
  • It’s pretty predictable who will drop out: those with weak academic ability in high school will probably not graduate. Caplan: “For students in the bottom quartile of academic ability [in high school], paying a year’s college tuition is almost as foolish as buying 10,000 lottery tickets.” I previously blogged about this phenomenon in my post Who Should and Should Not Be Going to College.

Bottom Line: The earnings premium college grads enjoy is complicated and may not have much to do with college per se. And fewer people should be attending college — especially those who struggle in high school.

Write About What You Know (So Don’t Write About Yourself)

“Write about what you know,” the creative-writing teachers advise, hoping to avoid twenty-five stories about robots in love on Mars. And what could you know better than the inside of your own head?

Almost anything. And almost anyone else is better positioned than you are to write about the foreign land between your ears. You are the person least qualified to be writing about changes in your own brain, since you need your brain to comprehend those changes. It’s like trying to fix a hammer by using the hammer you’re trying to fix.

That’s the always-interesting Michael Kinsley in the New Yorker, writing about Parkinson’s.

RIP Seth Roberts

seth-roberts-headshot-colorNews came today that Seth Roberts, the UC Berkeley professor of psychology, collapsed during a hike near his home. I met Seth through our respective blogs and shared a few meals with him in the Bay Area over the years.

I’ve blogged about him several times. Seth taught me about self-experimentation and science. He taught me about nutrition and fish oil. He taught me about innovation and creative thinking.  Most importantly, he taught me the value of appreciative thinking, which I once summarized thusly:

School teaches us to be proactively skeptical and critical. We’re taught to immediately look for the flaws in experiments or theories. An appreciative approach, by contrast, simply asks, “What’s redeeming about this experiment or idea? What’s done right?”

Some VCs are naturally appreciative, others naturally critical. After an entrepreneur pitch their first feedback will either be, “OK, here’s what I like about what you’re doing” versus “Here’s where I think the problems are.”

I am trying to take a more appreciative approach to people. When I meet someone new at a cocktail party, I am trying to ask myself more regularly, “What’s cool / impressive / interesting about this person?” as opposed to dwelling on their imperfections.

Like many who knew him or read his stuff, I’ll miss Seth. He was a one-of-a-kind thinker. And a deeply compassionate person.

Book Review: Floating City by Sudhir Venkatesh

For those of us for whom “vice” equals sending text messages while driving over the speed limit on a freeway, there’s a natural curiosity about the dark side of society — curiosity about what happens after hours, in seedy neighborhoods, among those whose livelihoods depend on breaking the law. Hookers. Drug dealers. Loan shark frauds. The curiosity begins with complete ignorance about the practical realities. For example, if I wanted to buy cocaine in San Francisco, I have no idea where I’d even start. I don’t want to, but I’m still curious about the process and the people. Who controls a given block? Who are the pimps and how do they recruit the hookers? Where and how do the bosses keep their cash?

This curiosity partially explains why so many of us are glued to TV shows like The Wire — it opens up a side of urban American life that’s as foreign as Beijing to someone like me. And yet, despite several of these shows on the air, it was still a total shock to find out a couple weeks ago — via an FBI affidavit — that just a few miles away, in San Francisco’s Chinatown, there is serious organized crime going on, with state politicians trafficking guns across the border, gang leaders ordering hits on enemies down the block, briefcases of cash being delivered to drug kingpins in dark alleyways, and other allegations pulled straight out of Hollywood bang-bang-shoot-em-up central casting. This stuff is happening right here, right now, just across the way. And I am utterly ignorant of all of it.

51crPRZL9JLA few years ago, a University of Chicago sociologist named Sudhir Venkatesh made waves by integrating himself into the Chicago gang scene. Now, in his latest book called Floating City: A Rogue Sociologist Lost and Found in New York’s Underground Economy, he integrates himself into New York’s sex trade. He meets people in the ecosystem, somehow earns their trust, follows them around, and writes about what he sees.

It’s an interesting book, and I had a couple broad impressions. First, there’s a fluid connection between the underground economy and the above-board economy in a given city–the hookers who sleep with Goldman Sachs managers; the hotel maids cleaning the semen-stained beds who owe their immigration status to a Yale finance graduate who runs an immigration smuggling ring; the drug dealers who cut deals with cops in order to make sure the Wall Street trader is hyped up enough to want to order the full menu from the prostitute; and so on. This overground/underground relationship is best understood in network terms, with distributed nodes and a constantly shifting structure. A second big picture impression was about the nature of global cities like New York, where the desperately poor interact with the exceptionally wealthy in such varied off-the-books ways. These mega diverse American cities play host to a recent immigrant’s quest for the American dream, a quest that oftentimes is financed by an “alternative economic path” that should be framed, Venkatesh reminds us, in more complex terms than just by the laws they transgress.

Venkatesh writes that “good sociology is always a mixture of close focus and long shot. You dial in and pull back, dial in and pull back, a delicate dance over the data gaps.” The book’s highlights come more in the form of colorful nuggets (“dial in”) than scintillating sociological conclusions (“pull back”). It may seem surprising, for example, that after spending so much time with prostitutes Venkatesh failed to discuss the question of whether prostitution should be legalized in the U.S. But I, for one, am glad he didn’t. Isn’t it more interesting to find out that hotel bellmen and taxi hailers get kickbacks in the form of free sex with the prostitutes to whom they refer a lot business?

Venkatesh himself is definitely part of the book. Plenty of sentences begin with “I.” Other reviewers have criticized this aspect of the narrative. Perhaps I’m more interested than most in the internal machinations of an academic sociologist spending his days surrounded by hookers and drug dealers and trying to write a book through it all and, surprise surprise, whose own marriage is falling apart in the process — so I didn’t mind the authorial interjections. It does add a dark tone to the book. But it makes the author’s own sympathy for his subjects feel authentic. And that sympathy is contagious. I came away feeling more understanding of the need for many of the people in the book to hustle their way to a living–to create a better life than the impoverished environment they were born into.

(Thanks to Aaron Hurst for sending the book to me.)

Is Employee Job Tenure Really Shortening? (Yes, It Is)

Catherine Rampell, writing in the Washington Post, says churn in companies is down:

The share of people getting laid off each month — as well as, more disturbingly, the shares getting hired and quitting their jobs — is near record lows. That’s according to Labor Department data released this weekand calculations from John Haltiwanger, an economist at the University of Maryland. Haltiwanger estimates that private-sector layoffs, hires and resignations are 21 percent to 26 percent below their rates two decades ago.

But is it true? It seems counterintuitive. The new Five Thirty Eight helpfully digs into the tenure data:

The median “tenure” of a worker — how long the typical worker has been with the same employer — rose by 14 percent between 1983 and 2006, to four years from 3.5. When the recession hit, the trend accelerated, with median tenure hitting 4.4 years in 2010 and 4.6 years in 2012. As counterintuitive narratives go, it would be hard to beat, “Job security continues to rise.” …

But when you look closer, it becomes clear that this counterintuitive narrative is counterintuitive for a reason. The Labor Department’s data on tenure look only at people who are employed. That means that if a large number of recent hires lose their jobs at once — as tends to happen when a recession hits — median tenure will rise, even though people aren’t staying in their jobs for longer.

The prerecession trend of increased tenure turns out to be equally misleading in a different way. There are two major forces at work. The first is age: Older workers are more likely to have been in their jobs for longer, so the gradual aging of the U.S. population has pushed up workers’ average tenure. The second is the entrance of women into the workforce and, particularly, into career-track jobs. In 1983, the average woman had been with her employer a year less than the average man; 30 years later, their average tenures are nearly equal. If we set aside those factors and focus just on men in their prime working years, there was a decline in tenure in the years before the recession. This is one case where conventional wisdom holds up.

Of course, the correct, conventional wisdom of shortening employee tenure is even more apparent when you’re looking at high skilled workers in dynamic industries.