So concludes Andrew Norton’s latest post, critiquing a study commissioned by Universities Australia from KPMG on the economics of investment in higher education funding.
Norton’s post includes the following passage:
This implicit assumption that students are homogenous pervades the report, but it is wrong. The efficient level of investment for a bright, hardworking young man (men being more likely to work full-time throughout their careers) is likely to be massively higher than for a middle-aged women of average intelligence filling in time after the kids have left home (helpful as these students are to tutors in actually doing the reading). Yet under the government investment scenario, each will have the same amount invested in their studies if they enrol in the same broad field of study.
[emphasis mine]
Recently Norton conducted his own survey on ‘Australian political identity’, and has been writing several posts on it despite this caveat:
The biggest obvious problem with the results, however, is the gender balance – or lack thereof. Only 14% of respondents overall are female.
I’ll leave my gentle readers to draw any conclusions about implicit assumptions in Norton’s work.
Update: Andrew Norton responds.
Yikes! I hope the rest of the Norton post is better than your bolded bits would suggest [or do they mislead?].
Is it worth me investing my sub intelligent elderly retired time to bother reading the post? Or shall I give it a miss?
You might not like the language or the conclusions, but at least deal with them on the facts and not on how mightily he accidentally insults your sacred animals.
Up to you!
The other assumptions I find dodgy are that a ‘market’ would efficiently allocate students to the class size best suited to them (and one hopes that there’s more to that than weird gender and age stereotyping – I actually don’t think, that aside, it’s at all clear conceptually what it might mean) and the predictable one that private investment is better than public investment – which I also don’t think is coherently argued.
Norton, among other things, works as a policy advisor at Melbourne Uni, I believe.
@2 – Jacques, you don’t see that the two bits I’ve bolded are a hoary gendered bit of stereotyping? It’s got nothing to do with language. There’s a tu quoque fallacy at work here – he himself demonstrates the categorial and logical errors he accuses others of.
And wrt to the political identity stuff, the sample is so distorted by the gender imbalance that every bit of subsequent analysis cannot support the degree to which the results are generalised (not to mention a range of other issues with sampling). Yet there’s a quick switch to categorical inference which is unsupported by data which treated quantitatively is junk.
Nope its not misleading!
There is so much wrong with the post Im not sure where to start.
The loaded language, the gender bias, the ideological assumptions, the paucity of analysis. ambiguity of terms ['what the hell does 'efficient' mean in this context].
I should have given it a big miss.
Yep. I think it’s worth pointing to, among other reasons, because Norton gets column space as a higher ed ‘expert’.
I dunno …. a middle-aged women of average intelligence filling in time after the kids have left home … seems a pretty attractive life to aspire to really. Andrew can keep his bright and hardworking young men. Kim, I guess you’re nominating Andrew for another Ernie Award?
Andrew’s neoliberal assumptions about universities are that they should respond to the demands of individual clients (the community shouldn’t make collective decisions about what it might want universities to contribute to society), that they are vocational training institutions, and that everything they do can be precisely measured, in dollars. If women, for whatever reasons, don’t turn education into dollars as efficiently as men, then they clearly don’t deserve the investment.
Consider this the nomination, Russell!
It’s also suspiciously similar to some of the reported diatribes (I think from Peter Walsh) at the Labor cabinet table when HECS was introduced about divorced women selfishly wanting to go to uni to study sociology… Note that the gender bias also supports the equation of education with individual benefit and productivity understood in a very narrow economic sense.
I’m not sure why you object, Kim. Andrew is making a valid point – that not all uni students will gain an equal benefit out of their education (and therefore neither will society). ‘Bright’ and ‘hardworking’ people will gain more, and he gives a reason why men might gain more. To make his point, he then contrasts with words equivalent to ‘not bright’, ‘not hardworking’, and ‘not men’. I’m pretty sure he wasn’t casting aspersions on women or mothers, or anyone at all. He was making a dry statement about how assumptions are important for policy-making.
“what the hell does ‘efficient’ mean in this context”
hannah’s dad, I think it’s pretty obvious. ‘Efficient’ means getting the most bang for our buck.
“If women, for whatever reasons, don’t turn education into dollars as efficiently as men, then they clearly don’t deserve the investment.”
Russell, that’s not what I took from Andrew’s words. He appears to be saying that if we give dollars away to people, we should give the most dollars to people who can do the most with them, otherwise we are wasting society’s resources.
You don’t see that swapping the stereotypes around would add or detract nothing at all from Andrew’s argument?
The stereotypes are hardly accidental, Jacques, I’d suggest.
@9 – Jarrah, you appear to accept the same sense of ‘benefit’ and to assume that education exists only to provide a benefit quantifiable in monetary terms.
Wonderful bit of self-fulfilling prophecy, innit? Wimmin don’t contribute to the economy…so let’s not waste money on educatin’ them! Why, the Taliban themselves couldn’t have said it better.
It’s attitudes like that which kept my grandmother out of school from the age of 14. And she’s as cunning as a s******** rat and could knock plenty of ‘bright hard-working young men’ into a cocked hat.
Really? Really?
Jacques, without wishing to belabour the point – Norton gives it away himself. Men, he argues, spend more time in the full time work force and therefore have superior economic value. The mature age (or “middle aged” in his terms) woman student has supposedly gone back to uni after her “kids have left home” – Presumably her ‘worth’ was only to raise the said kids compared to all those hardworking young men out there working hard in full time jobs (which of course is much much harder than parenting…) and now she’s just trying to “fill in time” – I could go on, but I think it’s pretty clear.
hmm, I’m female and I plan to return to university in my mid to late forties, not because I’ve had kids, but because I currently do a physically demanding job [in ecology/conservation]. I quit the course I was doing because I thought it made sense to do the physical work while I was younger. I would hope that returning to study at such a time, with a wealth of practical experience, would mean that I might have something meaningful to offer in terms of a contribution to my field of study. I think I shall be avoiding any academic institution that takes it’s advice from Mr Norton. I’m gobsmacked by that quote.
“you appear to accept the same sense of ‘benefit’ and to assume that education exists only to provide a benefit quantifiable in monetary terms.”
No, I don’t. But we’re not talking about education, we’re talking about the money spent buying education, so it’s not unreasonable to talk about the monetary benefit derived from it. As I said to Russell, if we are going to use resources for some purpose, we should use them where we can get the most out of them.
Also, money is simply a convenient measuring stick, one that theoretically can quantify any benefit. Or to put it better, any benefit, no matter how abstract, can be reduced or translated into monetary terms. How much do I like living next to the park? The amount extra I pay for renting here, or the amount I’d take to move away. Or make it two steps of translation, I value the park an equivalent amount to the inconvenience of having to walk a long way to transport and shops, which then can be expressed in monetary terms as what I’m willing to pay for a car.
Nope ‘efficient’ is not clear because what the ‘bang’ is in the phrase ‘bang for your buck’ is not defined.
And in the case of education probably can’t be.
Or shouldn’t be.
What is the purpose[s] of [higher] education anyway?
Unlike others I don’t accept money as being the magic measuring stick able to compare and enumerate enormously varying educational outputs.
What price poets?
How many lawyers does an ecologist equal? Dozens or hundreds?
“any benefit, no matter how abstract, can be reduced or translated into monetary terms” this is actually sick. The first thing I thought of was family, friends and community: how does the benefit of the love and care of your mother get measured in monetary terms? Perhaps think of Aboriginal kids removed from their families and communities – how does the benefit of growing up knowing who you are get measured in monetary terms? This is ridiculous.
But how ‘reasonable’ is it to commodify education in the first place? What price do you put on literacy? On understanding? On a ‘middle-aged man of average intelligence’ (in this case, my uncle) who after decades of feeling inferior because he never completed high school, then went and did a TAFE course and felt positive about learning and training for the first time in his life, in his sixth decade on earth?
As has been noted elsewhere this evening, ideology fades into the background as ‘commonsense’ when examined only within its own terms of reference. And the neo-liberal analysis of educational outcomes knows only the cost of everything and the value of nothing.
Anyway, within your own commodified terms of reference Jarrah, how ‘reasonable’ is it to assume that future returns from education will match past performance? As I recall, there are conspicuous warnings in all financial prospectus about that particular point. Today’s graduates earn only about 80% of adult average full-time earnings in their first job — in the 1970s they earnt more like 120% (Source: Australian Graduate Survey).
There are waaaay too many variables to make useful projections from a previous generation’s education/earnings outcomes to the next one.
Jarrah, we will only know the “return on investment” of educating today’s ‘hard-working young men’ and ‘middle-aged women of average intelligence filling in time’ in two decades, when the results are in. I know a ‘middle-aged woman filling in time’ in the 1980s who completed a psychology degree and, 25 years later, is still using it in productive and profitable private practice. So how do you like them apples?
You, Jacques and Andrew Norton should all know better than to assume past results can predict future performance. Especially when they start with such hoary old stereotypes and self-fulfilling prophecies as Norton’s piece apparently does. Blimey, let’s only educate the smart ones eh? The rest can go straight down the coal mines where we get the best value out of the buggers.
You all seem to be really jumping on what seems to be a harmless example. Would you have been oh so offended if he had compared a lazy 19 yr old frat boy with an ambitious 30-something woman retraining for a new career, having got the kids bundled off to primary school?
It was Universities Australia that tried to justify higher education on economic grounds.
Andrew Norton merely made a valid criticism about the methodology used in their study.
The economic payoff of a degree will vary with the number of future years spent in the workforce. Of the common student groups, young men and middle-aged women would be at opposite ends of the spectrum in this regard. Hence choosing them as examples.
Of course money isn’t everything. Education is also about intellectual enlightenment and personal empowerment. But here your beef should be with Universities Australia. I’m guessing they’ve discovered from hard experience that the inner kumbiayah of students isn’t enough to convince swing voters to give up their hard-won dosh.
Personally i think Norton was just using the stereotypes (highlighted by Kim) as an example of different people in different situations that would attract different levels of education funding if you were working on a system designed to get the biggest return on investment. Not an entirely unreasonable line of thinking on a “Classical Liberal” blog, but obviously a fairly narrow argument for “Social Democrats.”
I would like to think his use of gendered examples is based on they way society works now (or maybe a few years ago) and not an ideal society. i.e. he could have just as easily compared a dope smoking, straight out of school, first year arts student and a mature-age, mid-life, change-of-career, ambitious individual, and his assessments would be roughly similar.
On the other hand, if he does feel that way about the place of women, or even if he has chosen these examples without attempting to consider the use of gender in the examples, then yeah, that’s horrible and/or privileged.
Bottom Line: I don’t think an interpretation has been clearly demonstrated either way in that single post (Norton’s.)
@Jacques Chester:
In that case why couldn’t he be a little less intellectually lazy and not resort to stereotypes at all in making his argument?
He probably chose the examples he thought would most effectively communicate his point. I guess he underestimated how distracted people with a hair-trigger for gendered stereotypes would get.
Jarrah and Jacques win by a knock out. The premise of this piece is a big fat non sequitur.
As the piece itself acknowledges in its first line, Norton was commissioned to critique a study of the economics of investment in higher education. Not of gender issues in higher education. As an economic critique the quoted paragraph is valid to the point of being self-evident, and in the context of the purpose of his critique that is all it should be judged on.
It is a bit like the old saw re every problem looking like a nail if your only tool is a hammer. If you read everything though the prism of gender stereotyping, then there is a risk of everything looking like precisely that.
And before anyone goes me for sexism, I am not suggesting that gender stereo-typing is not a real issue. I am suggesting that if one studies commentary, be it on potato-farming, bovine flatulence or investment in higher education, to police it for gender stereotyping, an awful lot of the important points about potato-farming, bovine flatulence or higher education are going to be lost. There are better ways of constructively addressing gender issues than jumping all over throwaway lines like that in question.
But how do you quantify that in a statistical model? The data wouldn’t exist.
His point was that the modelling methodology was weak, and adjusting economic payoffs for basic demographics would probably be relatively easy and make the final results significantly more accurate.
Young men/middle age women example is probably the biggest difference that is easily defined.
It really speaks of the narrow, privileged world view behind the article that the writer still thinks that women drop out of the workforce as soon as they have children, play tennis, drop off little Fiona and Nicholas at grammar, play tennis and then (not having focussed on anything more rigorous than the Doubles scores at the local tennis club in the meantime) take up floral arrangement at university, not being concerned with, you know, income in later life and supporting themselves in old age and stuff like that. Of course, while all this has been going on, the archetypal woman’s brighter husband has been donning the suit and traipsing off to his successful job, so she really doesn’t need to worry her pretty little (averagely intelligent) head about such things.
Bah. Perhaps this is the “demographic” that infests my Alma Mater these days. Or for “demographic”, read “small uber-privileged social cohort”.
So a young guy who doesn’t know what he wants to do with his life takes an economics degree and works for five years as an economist before changing career and that’s efficient, but a middle-aged woman who knows for sure what she wants takes an applied science degree and works for fifteen years full-time as a research scientist, and that isn’t.
Even if the point is taken that Norton set out to critique the economic returns of education, even his assumptions suggest that there are variable returns for individuals and the inference is there (though not stated) that these returns go beyond some sort of “earnings over the life course” argument. If he were to make that rigorously, he’d need to complicate the notion of a ‘student’ doing a ‘course’ quite significantly. I agree that the example is mendacious and chosen deliberately to support the frame chosen. The non sequitur is clearly in the original piece.
I remember Richard Posner a few years ago opining that women should be charged more in student fees because they were more likely to lose years from the workforce to childrearing. So instead of having hoary old middle managers discriminating against us on the basis we’d just leave to get pregnant anyway, we have highly paid economists saying exactly the same thing but dressing it up in more impressive economicspeak. This can hardly be called efficient!
Norton’s starting premise that we should allocate educational resources only to those subjects we (glibly) assume will be most likely to make the greatest use from them is a great example of why economics became known as “the miserable science”.
For even within the terms of the stereotypes, Norton misses a great opportunity to increase the efficiency of our resource allocation (which is, it need hardly be said, our highest purpose in life, the ultimate goal of all creation — upon that glorious day the meaning of the universe will be revealed and humanity’s destiny fulfilled).
One answer might be to arrange employment conditions in such a way that there is no statistical likelihood that any given woman (even one of ‘average intelligence’!) will be available to the workforce for fewer years than any given ‘bright hard-working young man’.
But of course, we couldn’t go there, could we?
We must only work in a zero-sum paradigm where the boundary conditions (women stay home looking after kids, men earn the money) are fixed. I’d say the Taliban have the most efficient educational resource allocation of all — men get everything, women get nothing. You know it makes sense.
Merc, as other people on this thread have noted, AN was responding to a paper by Universities Australia trying to quantify the economic returns to higher ed. That paper adopted a strictly utilitarian approach, quantified in dollar terms, and AN analyses it within the context of that approach. That’s all he was doing.
I’ve been reading his site for a while, and I’ve never read him stating, or implying, anything like “we should allocate educational resources only to those subjects we (glibly) assume will be most likely to make the greatest use from them”.
Indeed, Paulus. I refer you to the headline for this thread.
I just wish uni’s would stop the faux academia line they’ve been taking for decades and instead admit they’re churn factories for voc ed. As soon as they do this we can have them “reinvent” themselves as the old CAE’s, return to intensive 2 year diploma courses focused on someone scoring a job (that cost less for both the institution and student) and the leave real Uni’s to get back to what they used to do best – research (or preparing students for a life in research).
Andrew writes so carefully that we can assume his description of the woman of average intelligence as “filling in time” (as opposed to the hardworking young man) was deliberate provocation!
I think Helen has it wrong – scratch a neoliberal and you find a person who’s annoyed that they may be contributing to services used by others. Andrew’s woman is undoubtedly the product of government school, who hardly worked at all before popping out a few kids and then living comfortably at home listening to Radio National and sipping chardonnay, thanks to Family Tax Benefits A, B, C and D or whatever. Now the kids have gone and rather than go to flower arranging or pilates classes, this woman has found yet another way to hoover up more of Andrew’s hard earned tax contribution.
Russell, you may be onto something there. I think there’s a bit of a tone of resentment slipping in – all those poor hardworking young men, while women just “fill in time”. That of course is a weird male fantasy!
Thanks Russell, and you’ve given me some good pointers as well. May have to stick to Sav Blanc in the current climate.
You’re assuming that it’s the employment conditions that lead to the statistical differences.
Not to mention, it should have been a “a middle-aged woman”, and not a “a middle-aged women”.
Did Andrew intend to write “middle-aged women of average intelligence” etc, before deciding that was pushing it? He continued to write about her in the plural…
That’s not the half of it, Sally.
Did you know that even after these wimmin spend all those years getting an education, about half of them are still below average intelligence at the end of it? I just don’t see why we should waste more of men’s hard-earned money on such recalcitrants.
Furthermore, when you consider that all those empty wombs could be so much more productive bearing children instead of occupying scarce university places — well, you can see why the scholars of the Victorian era had the right idea all along.
Much hyperventilating over at Andrew’s place from someone who’s been yanked out of his cocoon. Fraffly out of line, what!
Really, if one of us made this same comment in reverse we’d be accused of inhabiting a comfortable ideological echo-chamber.
I loved that new post’s premise: “Although I appeared to be making a silly and tone-deaf statement, actually all the time I was cunningly doing it on purpose to annoy teh feminists! You are all so pwned, ha, ha!”
I also note that it’s not just “likely to be higher”, but “likely to be massively higher”!
Just how many “middle-aged women of average intelligence” is one “bright, hardworking young man” supposed to be worth?
Tig-tog at 23:
“You don’t see that swapping the stereotypes around would add or detract nothing at all from Andrew’s argument?”
In that case why couldn’t he be a little less intellectually lazy and not resort to stereotypes at all in making his argument?”
Ha ha – because resorting to stereotypes to wind up the femi-nazi brigade is far more entertaining. You guys fall for it every time.
People must lead incredibly boring lives if their idea of a good time in purposely winding up other people. Yawn. Not to mention being lazy and dishonest. And of course femnists are ‘fact resistant’. But heavens, he wouldn’t just be a sexist tool, now would he?
“He probably chose the examples he thought would most effectively communicate his point. I guess he underestimated how distracted people with a hair-trigger for gendered stereotypes would get.”
Desipis sums it up. The remainder is just wilfully taking offence.
No, he’s changing his story now, Jarrah, and claiming it was all a Clever Plot to Get us Going. You see, we all walked into his cunning trap!
Diabolical!
It appears you care enough to comment, so what’s tripped your hair trigger, then?
Dropping back in after several hours, I am pleased to see that this issue has now been properly sorted, and we have furious agreement that damning Andrew Norton as a sexist pig is far more important than actually discussing what he and KPMG have to say about the economics of investment in higher education in Australia.
It would have been silly to have expected anything else.
Ah, but Wozza, you’re assuming Norton’s sexist imaginary to be separate from his account of those economics. Clearly some of us don’t think it’s a clear-cut distinction between content and form at all in the case of this kind of economic commentary, and this is why your suggestion that this thread is about ‘damning Andrew Norton’ is actually missing the point of these criticisms. You’re saying either we’re busy focussing on Norton’s sexism or we’re serious about the economics. Actually your logic replicates the sexist ‘example’ (scare-quotes being because the ‘example’ does more than exemplify) Norton himself offered: on the one hand the serious young working man, on the other the self-indulgent middle-aged woman; on the one hand those who are serious about the economics, on the other those who decry sexism. Let’s see how many more of these loaded distinctions we can pile up by the end of the thread…
If somebody is going to uni as a hobby, then they should pay for their own hobby. I’m sure they’ll have fun. People often have fun pursuing their hobbies. I enjoy playing poker and rugby and reading history. But none of this justifies taking other people’s money.
Of course, advocates for govt funding of eduction then point out that there is a supposed externality benefit to society from education. Putting aside the dubious nature of this externality, the conclusion from this argument is that the government should subsidise education to the degree that there is a positive externality to society.
Andrew is responding to this mainstream position, and making the obvious point that the externality from different people is different. I can’t see how this is controversial.
Ok, Wazza.
Since Andrew seems to be spruiking his own ‘system’, I hope it accounts for the following (just off the top of my head):
The “middle-aged woman of average intelligence filling in time after the kids have left home”, has a husband supporting her financially and doesn’t require the $60,000 in Austudy paid to a “bright, hardworking young man”, therefore it’s more ‘efficient’ to educate her.
The “bright, hardworking young man” would otherwise be working and contributing to the economy, the “middle-aged woman of average intelligence” would obviously not, therefore it’s more ‘efficient’ to educate her.
The report shows a higher increase in labour participation for women with a tertiary education than men, therefore it’s more ‘efficient’ to educate women than men.
“Yet under the government investment scenario, each will have the same amount invested in their studies if they enrol in the same broad field of study.”
Devastatingly stupid (and remarkably familiar) arguments, aren’t they?
I’d also like to know how Andrew’s system converts “huge differences in average lifetime financial gain” back into exactly how much one student of certain age/sex/smarts should be contributing, or may decide to initially contribute themself, towards their studies (say $22,000?) versus another student (say $16,000?), to achieve ‘efficiency’.
I would suggest that one bright, hard-working young man is probably actually not worth much at all, compared to a middle-aged woman of average intelligence who’s at least managed to reproduce. I suspect that most of the people who’ve spent our superannuation on hookers and blow would have been described thus a few years ago, and they haven’t exactly been a nett benefit to society …
As others have pointed out already, Andrew Norton’s (and KPMG’s, come to that) ideological biases fatally compromise the value of anything he has to say.
Straw man, whoops straw person, Klaus. Where did I say that this is an either/or issue? That is your interpretation, and a rather convoluted one it is, not mine.
Look, if people want to fill a thread with comments about gender stereotyping, that is entirely their privilege. I merely think that that doesn’t begin to address the issues of investment in higher education that AN was actually writing about, and is in fact pretty pointless since I don’t see any evidence that anyone is arguing that gender stereotyping is anything but undesirable.
Oh, and what John Humphreys said.
Indeed, Klaus.
As Paul Norton said at Andrew Norton’s blog:
There’s another assumption which is both (a) almost certainly wrong; and (b) gendered in Andrew Norton’s piece.
John – Can’t say I’ve encountered anyone “going to uni as a hobby” in 13 years of tertiary teaching.
I know a few people who do university subjects primarily out of personal interest rather than career advancement – perhaps they just don’t tell people at uni its their hobby? Going in as a mature age student you already stick out a bit. A few years ago I did half an MBA part time because I was a bit bored and the subjects looked interesting, although I have no intent of going into management.
“we have furious agreement that damning Andrew Norton as a sexist pig is far more important than actually discussing what he and KPMG have to say about the economics of investment in higher education in Australia”
I think that my inference was reasonable enough from what you’ve written: your assertion here is that the economic discussion is separate and separable from the sexist assumptions in which it is grounded, and what’s more this abstracted discussion is more important. This logic resonates with Norton’s own gendered distinction between seriousness and non-seriousness. Commenters here have rejected your framing of the issue, and Norton’s, not just decided to invert your distinctions.
As long as societies or individuals pay money for literacy, understanding, TAFE courses, or positive feelings, and as long as there’s an upper bound on what they’re willing to spend on those things, then there is implicitly a “price” put on them. When a society/government decides how much to spend on higher education, they are putting a price on it. If this is “commodification”, I can’t imagine an uncommodified education system.
Chris, yes, for sure. But that’s a different matter from the highly pejorative connotation of a “hobby” in this context which I think also plays to the same set of assumptions about gender.
There’s also the methodological (and philosophical) question of the value created by the hours of work and how that’s distributed, which is another one which is unexamined and taken for granted.
If evaluating education in narrow economic terms is tied up in sexism and conservatism, as some on this thread are implying, why is no one attacking Universities Australia?
A cynic might say LP only likes economics when it is simplistic enough to guarantee feel-good platitudes of the give-education-more-money variety. Don’t make the model too comprehensive though, or it might result in dangerous and ideologically unsound findings!
Universities Australia argues in economic terms because this is what registers with taxpayers. Why shouldn’t the money be put towards roads or hospitals? When compared against saving lives, intangible benefits just don’t cut it.
University education is indeed personally fulfilling, more profound than a ‘hobby’, and I’m certain it must have many positive externalities. But the same applies to my private study of the Karma Sutra. I surely deserve money for that!
The Universities Australia study also looks at benefit to the community through innovation and increased knowledge, David, as you’d know if you followed the link. The only way of looking at education in economic terms is not to quantify benefits to individuals (solely in terms of increased earnings).
LOL. I have actually seen Glen Wither give a presentation on the report.
The KPMG report:
“Considering … the difficulty in estimating social effects, we adopt the approach taken by Leigh (2008) as a starting point. That is, we assume that the total (private and social) return to education is equal to the average increase in pre-tax earnings from an extra year of education.”
The ‘community benefits’ are increased productivity, boosting exports, returns from university research and population increase as international students move here.
Somehow I don’t think this is really what LPers are after.
Leon, such a proposal is true, but trivially so. Since there will always be an ‘upper bound’ on the price that anyone would pay for anything (limited necessarily by the number of particles and energy available in the universe), then everything will have a price — but how well does the price correspond to a real or metaphysical value?
Remember, the global economy is in the mess it’s in because back around 1999 somebody came up with a ready reckoner way to put a price on parcels of thousands of sub-prime mortgages. The market, conflating price with value, proceeded to ratchet up a trade in securitized debt whose monetary value exceeded the GDP of the entire world many times over. Clearly price and value are not the same thing, and to pretend they are is an attempt to assert (neoliberal) ideology over reality.
There’s a reason why we have proverbs about people who ‘know the cost of everything and the value of nothing’. Because we understand, often at a gut level, that money is nothing more than a medium of exchange, not a metaphysical denoter of intrinsic value.
Neoliberalism subsumes the debate about value by assuming from the outset that the ‘wisdom of the market’ is the most perfect method in history for ensuring that price will best correlate with intrinsic value. It hides the problem of ‘value’ by defining it out of existence — and as has been noted up the thread — from the inside, ideology looks like common sense. But exhibit A for the prosecution against that particular bit of ideological blindness is the GFC.
The price people will pay for education is subject to countless variables concerning their absolute and relative levels of wealth, the level of status their society attaches to various forms of knowledge, their personal aspirations and (weakly) to expected future earnings. But that can’t inform us of the value, any more than AIG’s balance sheet circa Dec.2007 corresponds to an accurate assessment of its real assets.
What amazes me is that, 60+ comments into a thread titled “the conclusions are only as good as the original assumptions”, none of Norton’s defenders have shown the slightest inclination to acknowledge that the original assumptions of Norton’s article — conflating price with value, and proceeding to value future outcomes in terms of past conditions — are problematic, even suspect, and that this necessarily casts doubt on the conclusions.
Kim’s original point stands: If nobody can satisfactorily demonstrate that the original assumptions are valid, why should any of us accept the conclusions?
I’ve had another look at the comments on Andrew’s thread. Amongst other things, it would seem that the morons who take advantage of Catallaxy’s ultra-liberal comments policy are having a bad influence on Jason Soon.
I would add to that that the benefits of education are hard to track. Take pure research – as everyone on LP knows, advancements in science, medicine, and technology tend to grow out of research into something which is not really directly related to the things that grow out of it. It’s like a massive pot-au-feu which keeps bubbling away and producing benefits for society but not in a linear or predictable way.
Paul @ 62 – I’ve always thought that Catallaxy performs a valuable community service – long may it continue.
Adrian #64, do you mean that it keeps certain individuals (e.g. JC, Graeme Bird before he was banned) harmlessly occupied in front of the computer who might otherwise be out on the streets indecently exposing themselves?
[Disclaimer: I'm probably not well disposed towards Catallaxy at the moment because one particular comments thread (on the Durban Review Conference) has degenerated with indecent haste into a scurrilous flame pit directed against LP in general and me in particular.]
Yes Paul. Or just out in the steets generally.
There’s another saying: that the value of your house is what someone is willing to pay for it.
But Merc, since you evidently don’t have faith in the market in those terms, could you tell us what a better way is to ensure that price correlates with value? I’d love to know.
The thing about prices, as Hayek pointed out a long time ago, is that they provide signals about consumer preferences and about costs. You don’t get those signals in the absence of prices: that, in part, is why communism was so poor at satisfying consumer desires.
If we find that we can sell turnips at a price much greater than the cost of production, and make a large per-turnip profit, it’s a signal that people really like turnips. How else are we going to find this out?
Prices are not the be-all and end-all, and we shouldn’t make all decisions based solely upon them, but they are a very useful measuring-stick. If you disagree, name a better one.
For turnips, prices probably work best. For government, voting is probably better than buying politicians. Sort of depends on what you’re talking about. In education we mix up prices and government control, because prices alone won’t provide all that we value about education.
Paulus, the only thing I really object to in yours (and Hayek’s) presentation of price-signals reflecting valuations is that you state it all as so unproblematic.
Worse, a lot of ideologues are rather loopily insistent that markets provide perfect information, and proceed to prescribe them as a universal panacea. To paraphrase Churchill, markets are the worst system of assigning valuations, except for all the other systems that have been tried from time to time
Because the truth is that prices only ‘provide signals about consumer preferences and about costs’, except for when they don’t…
…such as when people behave irrationally (which is often), or there are supply-side fluctations in volume, or when new markets or market-segments are opened up, or a myriad of other factors, none of which have anything to do with consumer preferences and costs.
If people are paying high prices for turnips, it could be because there’s nothing else on the shelves, or that turnips are the only affordable option but they’d really prefer eggplants, or they’re in the middle of a turnip bubble instigated by mad Icelandic merchant bankers inflating the value of their turnips.
The price signals to which you and Hayek wish to cleave are subject to an awful lot of noise. Nothing wrong with that as long as you’re aware of it and able to filter it out. But if you can’t filter out the noise, or worse, refuse to acknowledge the existence of noise for the sake of theoretical elegance and ideological purity, and then loudly denounce any attempt to politely point out that the noise exists, then nothing can save you from the next turnip bubble….
…unless you really do believe that $68 million for a painting of sunflowers really does reflect its value.
That doesn’t preclude weighing the benefit in economic terms to both the individual and broader society against the cost of the education. A market mechanism probably isn’t the best approach, but there should be someway of making such a judgment.
Merc –
OK, let me make a threefold terminology distinction:
Value — as you describe it, “real or metaphysical”.
Price — as in, the amount of money one pays for something.
Market price — as in, the price determined by people buying and selling in a market.
My point was the following: because education costs money, the discussion must involve price as well as value. This is not “commodification”. People who say education should be “above money” usually just mean it should be free, i.e. paid for by everyone; but they don’t mean that teachers should be unwaged, and the question of how much to pay teachers still exists — whether you have a market or not.
Andrew’s point was that, in his view, a market price for degrees would better reflect their social value than a government-set price. He didn’t assume that; it was a point he felt needed to be demonstrated. His argument goes like this: a young person will have a lot of time to use a degree to benefit others and themselves, including through work. An older person will have less time to use their degree, and are less likely to benefit others or themselves through work. Using a market, it will be cheaper for youngsters who have many degree-enhanced ahead of them to get degrees, and more expensive for older people with fewer years ahead. He claims this is a net improvement on the current system.
Now in an ideal world, education would be free and unlimited, and in a just-less-than-ideal world, we could evaluate every individual based on their circumstances to see if paying for their degree would be a good idea. But in this world, and with the currently existing higher ed system, everyone is subsidized to the same extent, with more or less only their academic performance taken into account (how reductionist!). Andrew thinks a market would be an improvement. If you don’t approve of his market-based distribution scheme, come up with a better one or argue in support of the status quo, but don’t “ideology” his arguments out of existence.
I am so glad that in 1944 R.A. Butler knew nothing about the economics of education funding relative to gender when he introduced the Education Act which post-war changed British society and my life! In 1947 I was sent off to the County Grammar School where in four WWI nissan huts ten brilliant women teachers did a pretty good job of educating me along with hundreds of others with limited resources (sets of 35 dog eared text books, a very ragged donated library, and no audio-visual aids). More than six decades later which has included over half a century of full time productive work I can’t believe that this issue is even being discussed. Quite apart from the value of that education to me as an individual and to my children (remember that old chestnut “educate a woman and you educate a family”?) I know how much that 11 plus scholarship has returned to society in terms of years of teaching,running a school, journalism and very useful social activism! I am sure someone has already reminded you about women holding up half the world and how much better the world has to be if we are all educated. Thank you Rab Butler, Clement Attlee and Winston Churchill too, by the way! They seemed to understand about gender equity way back in 1944. Why are we revisiting the issue now?
Leon @ 71: If I were as confident as Andrew Norton that we can validly and precisely estimate the “added value” component of a “degree-enhanced” life for a 20-year old versus a 45-year old, at that granular a level, I might concede that there is a case to be made.
However, one reason the current system subsidizes everyone the same and allocates the same resources, is because we possess no valid method for discriminating at any granular level, or assessing circumstances and future-expected-value of an individual (or age cohort) degree.
Even though we possess a wealth of data about past graduate outcomes, this justifies little in terms of future performance. Somebody with a degree in the 1950s was 1-in-50. It’s little surprise that it added a great deal of earning power to their life. Somebody with a degree today is 1-in-4. It’s little better than a fish ‘n chips wrapper. Who’s to say that experienced 45 year-olds with a new qualification aren’t more desirable employees than a 25 year old who thinks they know everything because they’ve swallowed a course reader?
I refer you, again, please, to the title of this thread.
One reason we get everybody subsidized the same in such schemes is because it’s extremely difficult, and thus extremely prone to error, to tease out granular results. We’re pretty much left to just throw everything against the wall and see what sticks.
Heck, we have more reliable and justifiable data (ie. cost-of-living) to show why people should get more government benefits if they live in Sydney than in Adelaide, but everybody gets the same Newstart or DSP regardless of location. So for that reason alone, I don’t think you’ll be seeing individually (or age-priced) degrees any time soon.
Please, re-read the headline of this thread, and also consider that past results are not indicative of future performance. Can you really confidently argue for age- or circumstance- priced degrees under these conditions?
Sorry – I went full tilt at this as if it were the kind of windmill I’ve battled with throughout my life. Very lazy of me not to have read the thread thoroughly and then confined myself to the tertiary issue and to Kim’s and from there back to Andrew’s original post. I think however the same broad principles apply, whether we talk about investment in secondary, tertiary, or postgraduate education. Hell, why not start with pre-primary! How can anyone predict about character, personal cirumstances and even national trends and events to determine how to get the best bang for a buck particularly if it is calculated along gender lines. The conclusions are indeed only as good as the original assumption.
I’ve read more interesting analysis on the news.com.au site than on ANdrew Norton’s blog. From his first comment to his response post
The original researchers couldn’t get someone smart enough to properly model non-employment based economic behaviour, therefore we dismiss everything the economists idiotically call ‘externalities’, yes?
How is an analysis of education and the provision of resources based on such an assumption even useful? For anything? Besides creating epic fails on the interwebs?
And Leon from this thread:
I hope that is not his argument. Value is a function of time? Because it takes time to exploit workers and produce surplus value, maybe? (ASK JASON SOON, HE’S READ MARX!) Well done! Reductionist tosh at its best! Let’s give a little here (“benefit others and themselves, including through work”), so the fail grade assumption can be made that this benefit is equivalent between people, and, whala! Hence, it is only time that is a variable.
How many useful men have you ever come across that have been in their mid-20s?
Did you do the modeling for the original report per chance?
I failed first year modeling at univeristy doing my best chasing around those externalities, but even I can figure out this is bollocks.
Why do economists always try to make it easier for themselves? Do they think that the dumb people like me reading their ‘analysis’ will be dazzled by their grammar?
ffs. Epic fail.
Oh, it’s not just economists – nor even hardworking etc young men in their 20s – tools are everywhere!
“sets of 35 dog eared text books, a very ragged donated library, and no audio-visual aids”
LOL sounds just like the university I teach in (when I can find a teaching room where the lights work, or wheelchairs can be got through the door, or that is not across the hall from a set of overflowing bogs)
Merc–
That’s a reasonable point about 25-year-olds vs 45-year-olds, and I have no problem with you disagreeing with Andrew there. But my original point — made solely in response to accusations of “commodification”, etc. — was that if you believe in subsidizing higher education, you can’t avoid talking about the “added-value” (i.e. social benefit) of a “degree-enhanced” life. Our government spends millions of dollars helping people to get degrees because we believe it’s a good deal: we believe that our society is improved by having more degree-qualified people than would otherwise exist. Given we have to choose how much to spend on higher ed., we have to take a guess at the social “value added”.
I don’t know what you mean by “granular” here. The current system already discriminates based on academic performance, and based on the type of course people want to study. The reasons for this are pretty obvious: given the limited number of uni places, it’s better to train those who are academically able than those who aren’t, and it’s better to train those who want to be teachers, nurses, etc., than those who want to be (for example) lawyers. A lot of worthy people probably miss out on degrees under this system, but even more would miss out under a totally non-discriminating “first in best dressed”-type scheme.
You can disagree with Andrew’s suggestion that we also discriminate based on age, but you can’t deny that we already discriminate based on factors you might also call “granular”. So the relevant debate is “should we (also) discriminate based on age?”, not “is Andrew inescapably mired in the neoliberal ideology?”.
You’re absolutely right. Having welfare levels determined by state governments sounds like a good idea to me too: we should absolutely discriminate based on cost of living.
–
I’m not trying to say a market-based system would be great. I’m just defending the paradigm of estimating social benefits to determine good levels of government spending. Falling back on accusations of commodification or of being trapped in an ideology are cheap shots that avoid tackling the issues involved.
Leon @ 77 said
The same could be said (as has, I think, already been pointed out) of the usual tactic free-market boosters have of throwing away anything that doesn’t fit their preconceptions.