Saturday, March 23, 2013

Why are college and marriage different to economists?

In contemporary societies, there is a strong college wage premium. That is to say, people who go to college make more money on average than people who don’t. While a minority of economists (including [Tyler] Cowen) have questioned why this premium should exist, the majority of economists generally take the existence of this college wage premium to mean that college is good and important, that more people should go to college, and that public policy has some role to play in promoting and subsidizing college attendance. I would bet a goodly sum of money that if you picked at random ten tenured economists from top-20 economics departments, and asked them to list what an 18-year-old should do to increase his chances of getting high wages, a majority would say “go to college.”

There also exists a marriage wage premium, which is roughly as significant and as consistent as the college wage premium. To say that the marriage wage premium doesn’t get the same amount of attention is an understatement. Economists recoil at the idea of praising marriage and supporting public policies that increase marriage. They are much more likely to dismiss the marriage wage premium as reflecting selection bias (it’s not that marriage makes people earn more money, it’s that people who would have earned more money anyway tend to get married) or intone that “correlation is not causation”–criticisms that apply equally to analyses of the college wage premium. I would bet a goodly sum of money that if you picked at random ten tenured economists from top-20 economics departments, and asked them to list what an 18-year-old should do to increase his chances of getting high wages, none of them would say “get married and stay married”–even though the data on the marriage wage premium supports this conclusion to the same extent as it does going to college.

The perspective of economists seems as good an explanation for this discrepancy as any. Economics as a profession, pretty much by definition, self-selects people who on the whole enjoy higher education. Economists by and large enjoyed college so much they decided to stay there for the rest of their professional lives. Encouraging other people to do as they did feels natural. ...

Meanwhile, economists’ “cosmopolitan perspective” (as Cowen puts it) makes them not feel good at the idea of public policy that would interfere with personal choices (allowing for a second that getting married is a “personal choice” in a way that going to college isn’t). Most economists think that government should not interfere or have a stance one way or another with decisions that feel intimate to people. That is a complete value judgement. And it’s a completely defensible one.
--Pascal-Emmanuel Gobry, Forbes, on the myth of values-free economists. HT: Megan McArdle