Higher education and human capital

What good is higher education? The conventional view is that, in addition to producing a well-informed citizenry, it builds important human capital and raises national productivity. But what is the evidence for these assertions? In policy debates we are typically presented with faulty logic: workers in desirable, high value-added jobs (e.g., at Google or Biogen) tend to have lots of education. Therefore, if we want Americans to have such jobs we had better expand access to higher education. The counter argument, that returns to society as a whole from education diminish as access increases beyond the cognitive elite, is given below by a well-known curmudgeon and psychometric realist:

Brutal, just brutal: ...There is no magic point at which a genuine college-level education becomes an option, but anything below an IQ of 110 is problematic. If you want to do well, you should have an IQ of 115 or higher. Put another way, it makes sense for only about 15% of the population, 25% if one stretches it, to get a college education. And yet more than 45% of recent high school graduates enroll in four-year colleges. Adjust that percentage to account for high-school dropouts, and more than 40% of all persons in their late teens are trying to go to a four-year college--enough people to absorb everyone down through an IQ of 104.

Note the claim is not that benefits from higher education are zero for the average student, but merely that they diminish significantly as we expand access. At some point we need to consider whether the marginal cost exceeds the marginal benefit. No amount of schooling will turn an average student into a materials engineer, tax lawyer or derivatives trader.

I'm afraid these kinds of thoughts lurk in the minds of most professors these days -- I've heard them discussed many times. Why can't my students write? Why can't my students do simple math? Does the bottom half of the class really absorb anything from my lectures? Is science just too difficult for some people? If I showed you some of the emails I receive from students in my physics 101 course, you would cry at the lack of mastery of grammar and spelling, let alone physics.

Below I excerpt some depressing results from researchers at Stanford and Yale, which support the sorting and signalling model of higher ed, rather than the human capital building model.

Education and Verbal Ability over Time: Evidence from Three Multi-Time Sources

Nie, Golde and Butler

Abstract: During the 20th century, there was an unprecedented expansion in the level of educational attainment in America. Using three separate measures, this paper investigates whether there was a concurrent increase in verbal ability and skills. Changes in verbal ability in the general population as well as changes in the verbal ability of graduates of different levels of education are investigated. An additional investigation of how changes in the differences between males' and females' educational attainment are associated with changes in differences between their respective verbal abilities follows. The main finding is that there is little evidence that the large increase in educational attainment has resulted in an increase in any of the measures of verbal abilities and skills.

From the paper:

The results from using these three different measures of verbal ability and skills all show the same striking patterns: (1) there is no increase in scores in the overall population over time; (2) as the number of people obtaining a certain level of education increased, the verbal ability of those terminating with that degree has decreased. ...

Comment for the psychometric cognoscenti: where is the Flynn effect here? I see no overall increase in verbal IQ.






See also this less technical exposition:

Nie and Golde: ...Our initial hypothesis was that if amount of schooling causally affects any outcome, it would be verbal ability. The vast expansion of the American education system over the course of the 20th century served as our test bed. We expected that the huge increase in educational attainment in the U.S. across the decades would be accompanied by a substantial improvement in verbal abilities. To our initial amazement, we found no evidence for such improvement.

We started our investigation by showing that there is, indeed, a strong correlation between education and verbal ability. The data on which our analyses are based came from the General Social Survey, a program of in-person interviews that has been conducted regularly since 1972 by the National Opinion Research Center at the University of Chicago. While the samples were nationally representative, to avoid complications caused by changing demographics and questions about the validity of such tests with minority and immigrant populations, we included only the native-born, white American population 30 to 65 years of age, using information collected over the last 35 years of parallel surveys. (We used only those 30 years or older to ensure that we were dealing only with people who had completed their education; we stopped at age 65, lest we contaminate the analysis by differential mortality rates.)

Education levels and scores on a vocabulary test given to subjects are indeed correlated (see Figure 1). Over the three-plus decades studied, those with more education got better vocabulary scores, and vice versa.

Those results, however, do not necessarily imply that education causes increased verbal ability. If education did increase verbal ability, we would expect increasing levels of education over time to bring about measurably higher levels of verbal ability. During the 20th century, there was an unprecedented expansion in the levels of educational attainment in the U.S. The average American born between 1910 and 1914 received a bit more than 10 years of education. The average American born between 1970 and 1974 received 14 years of education. In 60 years, the "average American" went from being a high school dropout to having two years of college — a remarkable increase. The increase in education is across the board. A person born between 1910 and 1914 who obtained some postgraduate education was in the top 6 percent of his or her cohort in terms of education. By the 1970s, nearly 16 percent of the birth cohort had some postgraduate education. The percentage of college graduates or beyond has almost quadrupled over the same period, from just over 10 percent to almost 40 percent.

But, as Figure 2 shows, even though education has increased considerably through the decades, and even though education is correlated with verbal ability, verbal ability has stayed practically constant over time. The lack of change in the average vocabulary score of Americans, despite the large increase in the population's average years of schooling, is an intriguing finding. ...