wThanks for this reanalysis, David. It feels like those psychology exepriments being revisited and finding that not everything was as it seemed.
I am by no way an economists so pardon me for my question:
When Duflo’s results pinpoint to the ratio of wage increase by schooling increase thanks to the Inpres program, and then you give the alternative explanation based on the “2 truths”, I fail to see a difference in the basic structure of what happened between the two cases (putting aside the ratio in Duflo and the uncertainty of a ratio contribution in your reanalysis): Inpres schools got more kids to get schooled and it increased their earning VERSUS poorer regencies got more primary schools, which increased the chance of those kids getting to primary school and, comparatively with others who couldnt attend it, are more schooled and then -following one of the truths- more schooled is more earnings.
Am I missing something correct in my statement?
Furthermore, if schooling increases earnings and chances of getting schooled (reckoning schooling =/= learning) increase if there are schools available, should debates still focus on whether building schools increases schooling and then earnings or shift it to another area of attention? Im asking as someone who lives in an underdeveloped country.
Thanks a lot for this incredible work. I could read it through and like it. Now I will be re-reading Poor Economics with more skepticism.
Good question! I think it brings out a couple of subtleties.
First, in putting forward the “universal” truth that education and earnings go hand-in-hand, I mean that this is a regularly found society-level statistical association. It does not mean that it holds true for every individual and it does not take a position on causality. So I don’t mean to imply that if a particular child is made to go to school more this will “universally” cause the kid to earn more later.
In particular, while I think poorer regencies got more schools and that increased primary school completion, and while I believe that in general education and earnings go together, I’m much less sure that this particular exogenous perturbation in life paths had much impact. (One reason, which falls outside the study, you allude to: I don’t know if they learned much.)
Of course, it is entirely plausible that getting more kids into school will cause them to earn more later. Which brings me to the second subtlety. It would be easy to read this post (and perhaps I need to edit it to make it harder) as judging whether there’s any affect: does education raise wages. But I want it to be read as asking, given all we know about the world outside the Duflo study, should the Duflo study cause us to update our views much about the size of the impact of education on earnings?
I think the paper comes off as rather confident that it should persuade skeptics—see the block quote toward the end of my post. That is, if you were generally skeptical that education has much effect on earnings before reading the paper, it should change your mind, according to its author, because of the techniques it uses to isolate one causal link, and the precision of the resulting estimates. When I wrote “I wound up skeptical that the paper made its case,” this is what I was referring to. If you generally think education increases earnings on average because of all you know about the world, or if you think the opposite, this paper probably shouldn’t move you much.
wThanks for this reanalysis, David. It feels like those psychology exepriments being revisited and finding that not everything was as it seemed.
I am by no way an economists so pardon me for my question:
When Duflo’s results pinpoint to the ratio of wage increase by schooling increase thanks to the Inpres program, and then you give the alternative explanation based on the “2 truths”, I fail to see a difference in the basic structure of what happened between the two cases (putting aside the ratio in Duflo and the uncertainty of a ratio contribution in your reanalysis): Inpres schools got more kids to get schooled and it increased their earning VERSUS poorer regencies got more primary schools, which increased the chance of those kids getting to primary school and, comparatively with others who couldnt attend it, are more schooled and then -following one of the truths- more schooled is more earnings.
Am I missing something correct in my statement?
Furthermore, if schooling increases earnings and chances of getting schooled (reckoning schooling =/= learning) increase if there are schools available, should debates still focus on whether building schools increases schooling and then earnings or shift it to another area of attention? Im asking as someone who lives in an underdeveloped country.
Thanks a lot for this incredible work. I could read it through and like it. Now I will be re-reading Poor Economics with more skepticism.
Good question! I think it brings out a couple of subtleties.
First, in putting forward the “universal” truth that education and earnings go hand-in-hand, I mean that this is a regularly found society-level statistical association. It does not mean that it holds true for every individual and it does not take a position on causality. So I don’t mean to imply that if a particular child is made to go to school more this will “universally” cause the kid to earn more later.
In particular, while I think poorer regencies got more schools and that increased primary school completion, and while I believe that in general education and earnings go together, I’m much less sure that this particular exogenous perturbation in life paths had much impact. (One reason, which falls outside the study, you allude to: I don’t know if they learned much.)
Of course, it is entirely plausible that getting more kids into school will cause them to earn more later. Which brings me to the second subtlety. It would be easy to read this post (and perhaps I need to edit it to make it harder) as judging whether there’s any affect: does education raise wages. But I want it to be read as asking, given all we know about the world outside the Duflo study, should the Duflo study cause us to update our views much about the size of the impact of education on earnings?
I think the paper comes off as rather confident that it should persuade skeptics—see the block quote toward the end of my post. That is, if you were generally skeptical that education has much effect on earnings before reading the paper, it should change your mind, according to its author, because of the techniques it uses to isolate one causal link, and the precision of the resulting estimates. When I wrote “I wound up skeptical that the paper made its case,” this is what I was referring to. If you generally think education increases earnings on average because of all you know about the world, or if you think the opposite, this paper probably shouldn’t move you much.