Tuesday, October 8, 2013

Adult Literacy

Alex Tabarrok presents some fascinating OECD research on basic skills (source). In a relative ranking, and esp. over time, the US estimate (I think it's the mean, but I can't find the figure from the Times piece in the OECD paper; most of the tables in the appendix present the mean) drags behind the rest of the world.

Is adult basic skill erosion important? Maybe. Take a look at this graph from the source piece:

You'll note of course that apart from the very weird transformations they need to make this work (just look at that: "one standard deviation change in years of education" as if years of education share similar distributions across these countries. And don't get me started on sheepskin effects, people), the point estimates are pretty unimpressive. Naturally, this is made all the more difficult when you want to consider the marginal contribution of one extra year of education or one extra standard deviation in the ability to distinguish "they're" "their" and "there" towards productivity.

All that is very interesting, and if my point was to don my reviewer's visor, I'm sure I'd have plenty to say about what constitutes careful analysis. More importantly, please consider for a moment the interaction of adult literacy and the institutions that govern trade. Without actually seeing the distribution of the literacy scores (and I'd be very cautious about the limits of statistical inference in this case), my first instinct is to assume that those smaller countries with less cultural and economic heterogeneity will probably have narrower distributions than nations with relatively more liberal immigration policy, more geographic mobility, and bigger returns to network economies of scale.

I like to think about Lithuania for this, since I used to live there. One of the most memorable experiences of my time there was being accosted by a panhandler who spoke five languages.

Let that sink in for a moment. This isn't a contest of statistical moments, this is an example of institutional failure. For all its horrible faults, the Soviet Union was pretty good at universal literacy. Everyone my wife's age speaks both a native tongue and Russian at a bare minimum. Many also speak one or two other languages. Informal polling by me shows that the fraction of Lithuanians who know at least three languages exceeds the fraction of Americans who know the Konami code. Fat lot of good it does you to be able to read both Goethe and Dante in the original if you're left begging foreigners for bread money.

So what is important? I'll admit that it's pretty easy to read this report and worry that the elite ought to redouble efforts to improve education, but what if we've got is a search and matching problem? What if the danger is that policy is slowly but surely scrubbing marginally productive work from sea to shining sea? Take for granted for a moment that an adult might only read at an 8th grade level. Does it strike you as wise to prevent her from making ends meet as a manicurist by heaping on her years of licensing requirements and attendant fees?

If what we're looking at is a wide distribution of adult skills, the sorts of policies that will maximize the opportunity for euvoluntary exchange are those that best permit people from securing work that best suits their abilities. There is no Blue Fairy, but we can lift nonsense licensing requirements, freeze the minimum wage, enforce an impartial rule of law towards labor relations, and adopt a friendlier attitude towards entrepreneurship. Governing by statistical artifacts as if GDP or national literacy is some sort of international contest drafts peaceful people to serve against their will to satisfy the vanity of cynical elites. Misery is born from robbing people of their agency. Please resist the temptation to conclude from this report that what the US needs is more and stronger central control of education. Education isn't euvoluntary as is. Making it less so is needlessly cruel.

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Do you have suggestions on where we could find more examples of this phenomenon?