The truth about student debt

The Reality of Student Debt in the New York Times


"the share of income that young adults are devoting to loan repayment has remained fairly steady over the last two decades, according to data the Brookings Institutions is releasing on Tuesday. Only 7 percent of young-adult households with education debt have $50,000 or more of it. By contrast, 58 percent of such households have less than $10,000 in debt, and an additional 18 percent have between $10,000 and $20,000."

For what shall it profit a university if it shall gain AACSB accreditation and lose its own soul?

Mark Perry argues that the Association to Advance Collegiate Schools of Business is fueling the growth of fraudulent journals by demanding that faculty publish but giving no consideration to where they publish. I am starting believe that he is right.

Evergreen

http://www.insidehighered.com/news/2014/02/28/evergreen-state-colleges-unusual-take-assessment

This sounds like a good idea, but I think the article might be exaggerating how large a change this is. I graduated from Evergreen in 1984. For each interdisciplinary program you had to write a self-evaluation and an evaluation of the program and faculty, and the faculty member that you worked with wrote an evaluation of you. Each of these evaluations was 2-4 pages. Written evaluations and serious reflection have always been the norm at Evergreen. I do, however, think this is a nice addition. It sounds like it asks students to keep the big picture in mind. It also reminds me a bit of the plans that my daughter had to do while she was at Bennington.

 

P.S. I looked at the Evergreen webpage, and it is great to see that Greeners still have the opportunity to work with Tom Rainey and Jeanne Hahn.

HT to Steve Greenlaw

Problems with Bitcoin

The New York Times reports that "On Monday night, a number of leading Bitcoin companies jointly announced that Mt. Gox, the largest exchange for most of Bitcoin’s existence, was planning to file for bankruptcy after months of technological problems and what appeared to have been a major theft. A document circulating widely in the Bitcoin world said the company had lost 744,000 Bitcoins in a theft that had gone unnoticed for years. That would be about 6 percent of the 12.4 million Bitcoins in circulation."

Economic History in the News

Gregory Clark of UC Davis describes the results of his recent research in the Sunday New York Times. He uses a large amount of evidence on family names and economic status o show that reversion to the mean takes place, but it takes a long time. I thought his story seemed pretty persuasive. On the other hand, at the end he concludes that adoption studies, "along with studies of correlations across various types of siblings (identical twins, fraternal twins, half siblings) suggest that genetics is the main carrier of social status." I don't find this conclusion nearly as persuasive. The problem with adoption studies is that adoptable children are not selected at random from the population, making it difficult to say how for results can be generalized. I would like to see more direct evidence that people do not treat people with high status names differently.

Business Women

The Washington Post ran a story this morning about a company called FlexProfessionals. The business helps professionals who have been out of the labor force return to the labor force. The founder has an MBA from Harvard. the business generated over $1 million in revenue last year. This is the photograph that went with the story. I did not find the photo online; consequently, this is a picture of the photograph I took with the camera attached to my computer. It struck me as odd that they would be portrayed sitting on the floor. I do not believe that I have ever seen articles about business men that show them sitting next to each on the floor.

Bitcoin

One of my students asked what I thought about bitcoin the other day in class. I told him that I thought Tyler Cowen had made an interesting case for an eventual decrease in the value of bitcoin. Consequently, I am reposting a link to Marginal Revolution here.

Minimum Wages

This is from the Economist, suggesting, in response to Noah Smith, that micro is not the good economics. the author offers up the minimum wage as his example.

There are three things that both me about the article.

First, the author states that if you "ask any two economists – macro, micro, whatever – whether raising the minimum wage will reduce employment for the low skilled, and odds are you will get two answers." The link is to a survey of well known economists. Click on the link. The survey asked the economists to respond to this
"Question A: Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment." I have seen this survey cited several times. The actual question is almost never stated. To an economist the questions are actually quite different. The economists question is about the direction of change will it reduce employment or not? The actuial question was about the size of the change will it be "noticeably harder?" To an economist that is a question about the elasticity of demand not the sloe of the demand curve. Microeconomic theory alone does not make a prediction about the size of the change, whether it will be noticeably harder. That is an empirical question. with that in mind, look at the results of the survey.  The most significant ting to note about the results is that none of the economists said that they strongly agree or strongly disagree, and about one quarter simply said they were uncertain. the rest were split between agree and disagree. In other words, when asked an empricial question which most of them had probably not conducted first hand research on, economists either replied "I don't know" or "my best guess is ...."

Second, it is not clear that this is a micro question. The survey and the Economist article seem to be talking about the aggregate amount of employment of low skilled workers. Not the employment in a particular market. I tell students the difference between micro and macro is that micro deals with particular markets and macro deals with aggregates.

Third, the time series data on the effects of the minimum wage on the employment of low skill workers (the direction of change) seems to be pretty consistent. The size of the change, whther it is noticeable, is not, however, very consistent.

Consider this graph from http://idiosyncraticwhisk.blogspot.com/2014/01/teen-employment-and-minimum-wage-60.html via Marginal Revolution