Saturday, October 4, 2014

More education is not the same thing as better life outcomes; it depends on the context.

From The Effects of Conscription on Education and Earnings: Regression Discontinuity Evidence by Pierre Mouganie.
In 1997, the French government put into effect a law that permanently exempted young French male citizens born after Jan 1, 1979 from mandatory military service while still requiring those born before that cutoff date to serve. This paper uses a regression discontinuity design to identify the effect of peacetime conscription on education and labor market outcomes. Results indicate that conscription eligibility induces a significant increase in years of education, which is consistent with conscription avoidance behavior. However, this increased education does not result in either an increase in graduation rates, or in employment and wages. Additional evidence shows conscription has no direct effect on earnings, suggesting that the returns to education induced by this policy was zero.
A great example of the importance of context and of the common mistake of eliding "inputs are correlated with outputs" with "inputs are outputs".

More education is not the same thing as better life outcomes; it depends on the context.

Another illustration of the underlying validity of Reynold's Law
The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle-class people. But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay, in the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them.

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