Educational Signaling

I recently finished Bryan Caplan’s “The Case Against Education” which is a rollercoaster of a book. Caplan basically makes two claims: education is much more effective at signaling worker productivity than imparting practical/employable skills, and as a result of this we should cut state and federal funding for it entirely.

It’s natural to approach these assertions with a healthy dose of skepticism. I’ll withhold judgment on the second claim for now, but I admit I am moved by his arguments for educational signaling. In short, he demonstrates we learn nothing in school beyond basic literacy and numeracy. Take science. Caplan supplies the following table with data from the General Social Survey and his own corrections for guessing. IMG_0057He has similar tables for basic political and historical knowledge. Clearly, we retain very little in the form of pure information.

What about the old adage that education is supposed to “teach you how to think”? Caplan has an answer for that as well. He cites studies demonstrating that the entirety of one’s undergraduate education increases general reasoning ability marginally, and only specific areas depending on the choice of major. “Learning transfer,” or the ability to apply principles learned in one situation to another, is also rare, especially when the initial principles were learned in a formal context. Self-reflection confirms this. How many times have you explicitly used information/a pattern of reasoning developed in class to solve a problem outside of a test?

In fact, my own decision to study philosophy, and expect employment post-graduation, presupposes a signaling theory of education. I do not plan on becoming a philosophy professor, but that is the only occupation where what I learn in class will be relevant. Nobody uses Kant on the job, and I knew that ex-ante. Instead, I have to rely on the fact choosing philosophy signals something about me that employers value. In Caplan’s terms, I’m hoping it demonstrates my ability, conscientiousness, and/or conformity, as these are the primary signals a college degree functions to send.

I’m a convert. Signaling explains why students cheer when class is canceled, but are reluctant to skip, why MOOCs can provide an objectively better educational experience than many brick and mortar institutions but pose no threat to the establishment, why STEM graduates do not work STEM jobs, and why the years of college that see the most payoff are graduation years. The personal and academic evidence for signaling is gigantic. Why ignore it?

The individual implications for this conclusion are Excellent Sheepy. Because your degree + extracurriculars are the only measurements employers have of your productivity, maximize those. Do the minimum amount of work for each class. Cheat on tests. Join as many clubs as possible and try to get a leadership position in each. You’re not going to remember course material, and it’s surely not going to be relevant to your job, so who cares? Even if you’re overcredentialed for your ability and turn out to be a poor employee, you’ll stick around as long as your incompetence isn’t egregious. Firms will keep a marginal employee for years to delay finding a replacement and upsetting other employees.

The societal implications are also gigantic. If education is just signaling, should there be less of it? (Yes, but I’m not a full Caplanian). If education is just signaling, should it not be a human right? If education is just signaling, should this be an indicator e-learning companies should create better, more informative credentials rather than trying to improve content delivery?

 

I didn’t check my grades for two years

By the time college rolled around, I had made the decision not to check my grades at all. They had, quite literally, ruled my life during high school, and I was intent on making sure the future was different. This was not (fully) an irresponsible retreat from reality, but the consequence of some positions I began to hold about schools and learning. As a result, up until the end of my sophomore year, I never knew what letter grade I had received in a class or even what my GPA was. I never even got around to learning how to check my grades.

I knew how I did on tests and essays and the like. My policy was that, if the assessment is handed back to me, I’m allowed to know the score. In fact, knowing those types of scores was of the utmost importance to me.

To explain how I arrived at this strange and perhaps irresponsible decision, I am going to outline the general reasoning I used to get there. It will help to define some terms at the start. I’m going to use “marks” to refer to the individual scores one receives on specific assignments. 87/110 is a mark that one might receive on a test. “Grades” refer to numbers that are usually composed of the weighted averages of all of your marks. 88.4% is an example of a grade. “A,” “B,” “C,” etc. are also examples of grades because they are assigned by calculating the weighted average of your marks.

Here’s the reasoning:

  1. The objective of school is to learn.
    1. You should do things that contribute to this objective.
  2. Learning, roughly, consists of knowing things you did not know before.
    1. This is a two-part process. First, you must identify the things you do not know. Next, you learn those things.
  3. Knowing the marks you receive on individual assignments helps identify the things you do not know. Example: if you receive poor marks on a quiz that covers the binomial theorem, this is a good indicator you don’t understand the binomial theorem.
  4. Knowing marks on assignments contributes to the first part of learning. (2.1, 3)
  5. You should know your marks. (4, 1.1)

As the example in (3) suggests, marks are helpful because they give you feedback at a low level. What you receive on a single essay or test can often tell you what you know or don’t know with a fair amount of specification. This, I admit, mostly happens if you get the actual assignment handed back to you with a certain level of feedback. If you only know the “true mark,” or what percentage of points you received, it can sometimes be difficult to figure out the exact extent of your knowledge. Luckily, individual assignments often cover only a handful of topics, so it can be easier to infer what you missed.

So far, we’ve only established that you should know your marks. Great. How did I arrive at the idea these are the only things you should check?

This conclusion was established negatively. I couldn’t find any argument that appealed to learning that says I should check my grades. Let’s try to start from the first two premises of the prior argument, incorporate grades, and arrive at the conclusion we should check them.

  1. The objective of school is to learn.
    1. You should do things that contribute to this objective.
  2. Learning, roughly, consists of knowing things you did not know before.
    1. This is a two-part process. First, you must identify the things you do not know. Next, you learn those things.

We can’t use the same move as last time. Grades, because they are a weighted average of many individual assignments, can’t carry information about what specifically you don’t know. If you get a C in a Shakespeare class, you can convincingly say “I don’t know Shakespeare,” but how helpful is that? You’ve identified what you don’t know on a superficial level, but that statement doesn’t provide a useful direction towards actually learning the stuff. Are you shaky with Othello? Does the play format give you fits? Can you even penetrate Shakespearean English? A poor grade only says you need to do work. It does a horrible job of specifying exactly what needs to be done.

We’ve seen that grades are ineffective at identifying the things you do not know. The only remaining way to relate them to learning, and establish that you should pay attention to them, is to claim they somehow help you learn those things.

Now, how can grades help you in the act of learning? This is unclear. In what way does knowing the weighted average of your marks allow you to understand academic material better? A certain type of knowledge about the points you’ve earned doesn’t seem related to your ability to comprehend unrelated concepts.

I can see a skeptic coming up with a counterargument. They might say that knowing grades can give someone motivation to study and learn. They might want a better grade rather than a worse one, so knowing where they stand pushes them to spend time with the material. An attitude like this violates the first premise, though. A student who is motivated by grades supplants learning with credentialism as the goal of school. The student would have to reject premise 1 and commit themselves to a school experience that makes learning an afterthought. No good.


This is reasoning, in some inchoate form, was what was floating around my head when I decided not to check my grades after my first quarter of college, and the second, and the third, and the fourth, etc… I had a faint idea of what my GPA was since I saw the marks on the tests I got back, but it was very vague. Basically, I knew I wasn’t going to be on academic probation anytime soon.

I must also emphasize this is the literal truth. I didn’t peek here and there or do some back of the napkin math to get an approximate sense of my grades. I was in complete and utter ignorance of my official GPA.

And it was wonderful. For the first in my life, I felt a deep sense of academic freedom. I understood that I was at university to learn, and my behavior was fully consistent with this fact. I did close readings of texts when I could have skimmed them. I revised essays two, three times when I knew the first draft would do. I read more books in my free time than I had since middle school. I felt comfortable talking candidly with my professors and TAs because I wanted to learn, not grovel.

This doesn’t mean my college experience was/is faultless. An unambiguous focus on learning was somewhat of a compensatory mechanism meant to address the many faults I found in my institution. Nonetheless, the experiment was a success.

Readers at this point are perhaps left with several questions. “Riley,” they ask, “do you still not know your grades? Why submit yourself to such paralyzing uncertainty? Don’t you understand your GPA determines a significant part of your adult life, playing an instrumental role in considerations like, but not limited to, your attainment of internships, full-time jobs, graduate school admissions, scholarships, loans, and other professional opportunities? Are you out of your mind?!?”

In response to the first question, I currently know my GPA. This experiment concluded at the end of my sophomore year, but the effects are, hopefully, permanent. I understand what it’s like to put learning first, and, though it takes much effort, I intend to keep it this way.

An explanation of why the experiment ended addresses the remaining questions. I began to pay attention to my grades again because I realized the argument I gave above is wrong. Premise 1 is faulty. Ask anyone who isn’t a philosophy major what the purpose of school is and they will say anything but learning. Formal education can be about creating a workforce, increasing social mobility, instilling civic knowledge, cultural assimilation, personal maturation, landing a job, proving something to society, or proving something to yourself. All of these are valid ends of the enterprise. Surely, you can find an argument that appeals to one of them and concludes you should check your grades. Instead of reading “the objective of school is to learn,” premise 1 should say “an objective of school is to learn.”

Do I regret this decision? Absolutely not. I acted in full accordance with my values. Were my values those of an educational idealist, dismissive of the many social, cultural, and economic objectives of formal schooling? Sure. Should you ignore values arrived at via ample reflection because you’re unsure if they will change in the future? Almost never.

I’ll maintain that learning should be the principal objective of school, or at least near the top of the list. However, as soon as you introduce other grade-influenced ends into the mix, saying you should not check your grades is indefensible. That’s why I know my GPA now. I don’t obsess over it. I don’t stake my emotional health on whether it twitches in one direction or another. It is a metric that, for one reason or another, people care about. If I want to convince these people I deserve to study with them, work with them, or use their money, I shouldn’t neglect it entirely.

Yet, I remain committed to learning. I’ve seen what wonderful academic experiences are possible if I let it motivate my decision making. I recommend you take this idea seriously. If you do, this doesn’t mean you should ignore your grades. Just check them a little less often.

 

Did household appliances actually save time? Does this matter?

I used to have this idea that the introduction of electric appliances circa 1960 dramatically reduced the number of hours people, especially housewives, spent on domestic tasks. The thought is pretty intuitive. It’s quicker to wash clothes with a washing machine than with a tub and washboard. Dishwashers are more efficient than washing dishes by hand. In the span of a couple of years, I thought, American housewives had much more free time. This idea fits nicely with the fact women’s workforce participation rate increased in the 1960s and the decade marked the beginning of second-wave feminism. Just perhaps, a decrease in the domestic load allowed women time to reflect on unjust norms and mobilize against them.

Unfortunately, the data do not support me. Household appliances are not the fiery instruments of social change I imagined them to be. There is no doubt they altered American domestic life, but they did not reduce the aggregate time spent on household duties.

Several time-use studies from 1925 to 1965 corroborate this.

Screen Shot 2019-12-29 at 8.04.51 PM.png
Source: (Ramey 2009)

As we can see, total home production, or the amount of time housewives spent on domestic tasks, remained approximately constant from the 20s to the 60s. This is surprising considering home appliances diffused rapidly during this period. In 1925, fewer than 20% of American households had a washing machine. By 1950, more than 75% of them did (Bowden and Offer 1994).

However, the allocation of time had changed between the decades studied. Hours spent in food preparation and care of clothing decreased and were shifted towards general managerial tasks (purchasing, management, travel, and other). We can imagine appliances and relying more on store-ready food contributing to decreases in food-prep time for the 1960s housewife. We can also imagine frequent trips to the grocer increasing the time spent on travel, for example.

Even the presence of basic utilities didn’t seem to decrease time spent on domestic duties. Time-use studies comparing black and white families in the 1920s reach surprising results. Black housewives at the time, most without the luxury of a kitchen sink or running water, spent just as many hours on housework as their white counterparts. Both parties averaged around 53 hours a week. As it turns out, time spent on household production is not correlated with income (which is —most likely— correlated with the amount of technology in the home). How could this be? (Ramey 2009) explains:

[Since] lower income families lived in smaller living quarters, there was less home production to be done. Reid argued that apartment dwellers spent significantly less time in home production than families in their own houses; there was less space to
clean and no houses to paint or repair. Second, there is a good deal of
qualitative evidence that lower-income families produced less home
production output. A home economist noted during that time “if one is
poor it follows as a matter of course that one is dirty.” Having clean
clothes, clean dishes, a clean house, and well-cared-for children was
just another luxury the poor could not afford.

There are additional historical factors that explain why household production did not decrease with the introduction of appliances. The first views appliances as a substitute for another labor-saving device whose availability was dwindling: servants. In the early 20th century, it was common for middle-class housewives to hire help. Servants and maids assisted with cooking, cleaning, and caring for children, among other things. Foreign-born residents were usually employed in this capacity, but when immigration restrictions were imposed, domestic labor became scarce. The decline in servants and maids coincided with the rise of electrification and home appliances, allowing a single woman to accomplish what used to take a staff of two or three servants to do (Ramey 2009). Appliances, in this sense, compensated for the loss of a maid. Perhaps it used to take an hour for you and two servants to do the laundry. With a laundry machine, it’s now possible to do the laundry by yourself in an hour. Time spent in home production remains the same, but there are now fewer “inputs” to the process.

The second explanation appeals to changing standards. While appliances were being introduced to American families, new ideas about sanitation and nutrition were also spreading. Housewives learned they could positively influence the health and well-being of their family through their housework, so they opted to do more of it (Mokyr 2000). Even though they could have cleaned the house or cooked dinner much quicker than before, housewives decided to keep cleaning, or cook a more demanding meal, rather than take the time saved by appliances as leisure.

Do not fear. Hours spent in home production by women did begin to decrease near the end of the 1960s. Yet, this was not due to advances in labor-saving technology.

 

Screen Shot 2019-12-30 at 5.00.26 PM.png
Source (Ramey 2009)

Men began to contribute more. As a result, the average woman devoted only 30 hours per week hours towards household production in 2005, compared to the ~50 hours she may have expended in 1900. However, total hours spent in home production per week, the sum of male and female hours, has not shifted much over the century. The average person today is likely devoting as much time towards domestic tasks as their ancestors did over 100 years ago.


I think there are potential implications here for thinking about the future. Many of us imagine that advances in technology will increase productivity dramatically, and as a result, we will be able to enjoy much more leisure. If we can accomplish in 20 hours what it used to take 40 hours to do, why work the additional 20 hours?

Yet, history suggests that advancements in domestic technology do not necessarily save us time. Their benefits roll over into things like increasing living standards before we see additional leisure. Standards for health and cleanliness may increase steadily as our capacity for nutritious meals and clean homes increases as well. Perhaps something vaguely similar to the immigrant/servant situation could happen. Innovations in household technology might decrease time spent in home production, but maybe our jobs become incredibly demanding, eating any time saved by being able to cook or clean quicker. In both scenarios, leisure loses.

I don’t think this is disheartening news. Recall the black and white families studied in the 1920s. Even though housewives of both races spent approximately the same amount of time on household production, the white families were much better off. They enjoyed a higher standard of living due to basic utilities like running water and probably also other bits of technology present in their homes. Even though inputs, in terms of hours expended, are similar, the difference in outputs is astounding.

As a result, a more realistic version of the future might still have ~50 hours of home production for each household, but living standards that are much, much higher. Our health will be fantastic, we will conform to the highest standards of sanitation and hygiene, and we will unequivocally be better off, leisure be damned. We imagine an ideal future as a place with infinite leisure, but a society in which our standard of living is ten times as high with us putting in the same amount effort is still pretty damn good.

 

Works Cited:

Bowden, S., & Offer, A. (1994, November). Household Appliances and the Use of Time: The United States and Britain Since the 1920s. The Economic History Review, 725-748.

Mokyr, J. (2000). Why “More Work for Mother?” Knowledge and Household Behavior, 1870-1945. The Journal of Economic History.

Ramey, V. (2009, March). Time Spent in Home Production in the Twentieth-Century United States: New Estimates from Old Data. The Journal of Economic History, 1-47.

 

What I’ve Learned at 21 (with brief justifications/explanations)

It’s almost obligatory at this point. Around your birthday, you write a post/article detailing what you’ve learned thus far and some thoughts going forward. Yet, just because the “what I’ve learned at x” post is common doesn’t mean it’s without value.

Hopefully, this blog post is the first step of what will become a lifelong project. I already journal every day and record some of what I’ve learned there, but making a public list helps me clarify my thoughts and allows friends to challenge them. In the future, it can also afford me an opportunity to publicly affirm or refute something I said in previous years. It’s certain some things I mention below will turn out to be false. Other things might take on additional significance with the passage of time.

Instances of the “what I’ve learned at x” genre typically proceed as follows: a brief introduction, a flurry of aphorisms, and an optimistic conclusion drawing attention to the next 365 days. I’m keeping the beginning and end, but modifying the middle. Instead of dispensing with the things I’ve learned in bullet-point format with bullet-point brevity, I aim to provide some additional justification/explanation for each one. Where I can provide an adequate argument for why something is true, I hope to do that. If not, the least I can do is outline why I think it’s plausible.


Three things matter a lot to me

(1) Having intimate relationships with wonderful people (2) Being interesting to myself (3) contributing to progress.

Explanation of (1): My friendships are my most prized possessions. To have people with whom you can speak candidly, who will push you in unexpected ways is invaluable beyond expression. Some of our most basic human powers can only be fully exercised in friendships like these. For this reason, I consider them essential for making a life go right, and count myself fortunate beyond belief to have already experienced several of these relationships in my short life thus far.

Justification for (2): A thought experiment: you must wear a secret service style earpiece for the rest of your life that relays you the real-time mental activity of another human being. Every thought they have, every idea that flashes through their mind enjoys the same force inside of your own head. What type of person would you hope to be connected to? Beyond wanting them to be kind and generally nice, chances are, you would also want them to be interesting. You would like them to have varied thoughts about varied things and play with ideas you might not have encountered otherwise. Under these circumstances, this freaky mind-reading scenario might actually be enriching, and you wouldn’t mind having another person occupy your head.

This might be even more convincing when you consider the alternative: having the same bland thoughts piped into your mind every day. I can imagine being neutral towards this possibility in the short run. After all, boring thoughts are inescapable. Yet, years of this might erode you until you are just as uninspired as your mental companion. This is, as it were, death by dullness.

If the possibility of mental poverty caused by foreign thoughts is unacceptable, then the same possibility caused by endogenous ones should be equally terrifying. Thankfully, our thoughts are controllable to a large extent. We can choose who we’re “hooked up to.” As a result, we can aspire to have our heads be exciting places to live rather than arenas of tedium and routine.

Explanation of (3): I don’t have an argument here (at least not yet) but this value stems from something intuitively compelling about the idea of progress. The world today is much better than the world prior to the industrial revolution, and that world was still superior to the world during the middle ages. Doing my part to make sure the future is still better than the past just seems like a reasonable thing to do.

Additionally, I can thank Lincoln High School and the entire city of Portland for instilling in me a desire to be normative. I spent my formative years in a community that publicly valued righting historical wrongs and securing our future from existential threats like climate change. I learned that it’s not only possible to shape the future into a just and prosperous society, but that we’re morally obligated to do so.

Wonderful people are rare and cannot be taken for granted. Do everything possible to maintain close ties even though time and circumstances may pull you and them apart.

Explanation: Whether there actually are few wonderful people out there or the conditions under which we interact make it difficult to recognize the wonderful-ness of others is an open question. Yet, it’s clear their company is not guaranteed. I’ve been fortunate enough to meet wonderful people who, though they no longer belong to the same institutions as me I’ve managed to keep in touch with. Our relationships have been rich and deeply fulfilling, and life would be much harder without them. The benefits of being around wonderful people need not decrease with distance, though ensuring this requires deliberate effort.

Everything worth doing is difficult, but not everything difficult is with doing.

Justification: This is best illustrated by an example. Curing cancer is incredibly difficult, but the suffering endured in pursuit of this goal is justified by your service to humankind and the pure pleasure of solving a seemingly impossible problem. Attempting to run up Mt. Everest is also hard, but it’s much more difficult to get a convincing answer as to why it’s worth doing. Even if you find a plausible reason (I must prove something to myself, I enjoy setting absurd goals and achieving them, etc.) it cannot have the same gravity that the reason behind curing cancer has.

Interrogate your goals. They may be ambitious and difficult, but this does not mean they are worth your time.

You are the average of the 5 people you spend the most time with, but this doesn’t give you an excuse to be an asshole.

Justification: The first part is almost a cliché, and I take it most people can recognize the immense power of your immediate social circle on your thoughts and attitudes. Exercising personal aspiration by controlling your company, however, carries a hint of snobbery that’s difficult to dismiss. Pick your friends wisely, but having high standards is also compatible with being kind and open-minded.

Good roommates are incredibly valuable

Justification: This is intuitive, though it’s tough to know how much more valuable until you’ve gone from having a poor roommate to a fantastic one.

The majority of your interestingness is determined by how much you read.

Justification: I’ll claim that your level of interestingness is related to the volume and quality of ideas that go through your head. It’s possible to have a lot of interesting thoughts on your own, but we’re all limited by our experience and expertise. The solution is to maximize exposure to ideas, and this comes either through reading or interacting with interesting people. However, the people you can interact with are also limited by their experiences, and all of you are limited by time and place. The fact you can interface with them and speak the same language means you all live in the same era, within roughly the same culture, and mentally developed with respect to the same dominant ideas.

Reading faces these problems to a minimal extent. Translators alleviate the language barrier, and our compulsion to write and record has given us the opportunity to hear the major ideas of every civilization up to the present, provided the relevant texts survive. The volume of potential ideas you can be exposed to expands dramatically with reading. I’ll also claim reading exposes you to higher quality ideas. Poor thinking is less likely to have survived millennia, or be published in collected essays or anthologies. It’s possible to get your fix of ideas via oral exchange, but reading is generally superior.

Live music is wonderful

Explanation: I always forget this until I see a live performance with someone really good. There’s nothing quite like feeling the bass in your chest or getting chills from a vocalist. We all need a little more of this in our lives.

Girardian Terror is real

Explanation: Very roughly, Girardian terror refers to the idea that our desires are mimetic. We want things that we see other people want, and competition between us and others similar to us who desire the same thing leads to anxiety, conformity, and terror. For a lengthier discussion, see Girard’s wikipedia page, or his IEP entry. To see how Girard’s theories apply in a business context, check out Zero to One.

The intuitive appeal of this idea is easy to see. If everyone in your community (school/friend group) wants to be a doctor/lawyer/engineer, it takes a substantial amount of awareness and willpower to resist finding yourself aspiring to the same careers. Once desires are standardized, then competition between you and your peers for the limited number of med school/law school slots is fierce. So little differentiates you from the others. Every triumph over them represents a step towards distinction. Every failure is a slide backwards into obscurity.

Dan Wang has an excellent post on how American colleges and universities are perfect incubators of Girardian terror. I highly recommend reading it.

Alcohol is overrated

Justification: Who are you more likely to have a good conversation with, a drunk person or a sober person? Is this more likely to happen when you’re drunk, or when you’re sober?

Always have several uncommon/interesting questions on hand.

Justification: Unless it’s the case you and another person happen to have much in common, meeting someone new can be painful. Bypassing small talk with pointed, interesting questions can be the first step towards making a mundane interaction interesting, or performing conversational triage. Two of my favorite examples include: what’s the worst advice you have ever received? What’s something true but unpopular? Lama Al Rajih has a fantastic list of such questions here.

I want to die in Portland

Justification: circularity.

I do not want to raise children in Los Angeles or the Bay Area.

Justification: I have a clear bias towards my non-Californian upbringing. Yet, I still think both locales fail in several major areas that are, in my opinion, crucial for healthy development.

Los Angeles is devoid of natural beauty. It’s a great place to be if you’re into highways and overpasses, but I have not once looked around and thought to myself “this is a really beautiful place to be.” Malibu and Pacific Palisades suffer from this problem less, but let’s be real. It is unlikely I will live in either location.

For the Bay Area, if half of what I’ve heard about their high schools is half true, the entire educational experience is psychologically damaging for the average student.

Air quality is also a concern for both locations. The Bay Area less so, but if we continue to discover that air pollution is really bad for you, this would become more of a factor.

Both also suffer from housing and transportation woes that may only increase in severity. Being wealthy solves these problems to a certain extent, but I do not my children to grow up thinking they need to make at least $117,000 to enjoy a decent life.

Human reason can solve any problem

Explanation: This is a big claim that I can’t defend well. To do so requires an incredible understanding of history and philosophy that I do not have.

What brings me to this view is an intuition. Humanity has solved countless, seemingly intractable problems, and there is nothing to say we will not continue to do so. A skeptic mentions the problems we haven’t quite solved yet. P=NP,  the Goldbach conjecture, the existence of God, etc.. My naïve reply is that these problems are really hard, but solvable given enough time. Perhaps we eventually get there on our own. Perhaps we “solve” these problems indirectly by cooking up an AI that can handle them for us. Who knows? I think it’s a lack of imagination that causes people to think that just because we cannot solve something now means we will never be able to do it.

Ask and ye shall receive

Justification: This is all anecdotal, but cold emails work wonders when you’re a student. When I was running the Stumptown Speaker Series in high school, we booked free event space, got advertising, and brought in fantastic speakers like Kim Malek of Salt and Straw, all pretty much by asking. The strategy worked the same in college. While I was in charge of bringing in speakers for Bruin Entrepreneurs, we booked local entrepreneurs and members of Forbes 30 under 30 all via cold email.

The trick is to never copy/paste the same email template. Every message I sent was “handwritten” and included something specific to the receiver. I wanted them to come in, as opposed to someone else, and the emails demonstrated that I had done my homework. This is why to book three speakers I only had to send four emails.

People aren’t comfortable asking strange/intrusive questions but are perfectly fine answering them.

Explanation: I actually learned this from some social science research that came my way, but I can’t find the exact paper at the moment. The takeaway is that you should ask more questions, regardless of whether you think they go a bit too far. Obviously, there’s a boundary, but it’s not where we think.

Become friends with the strange people you meet. They’re much more interesting.

Explanation: Self-explanatory. A corollary is that if there are no strange people around, you are not in for a good time.

Sexy things are almost always overvalued

Justification: Here’s an example. The global professional sports industry took in revenues of $91 billion in 2017. The global cardboard box industry recorded revenues of $500 billion in 2014.

People like to be applauded for what they do. They like to feel their industry is “hot” or “sexy.” Some industries certainly deserve the hype they generate to a certain extent, but many of the products and services that are absolutely integral to our daily lives and current standard of living are very “unsexy” by mainstream standards. Think public infrastructure and the like.

I’m willing to generalize this beyond the economic sphere, too. Sexy restaurants, institutions, or ideas are probably so because there’s at least one thing extraordinary about them. Yet, what they offer is probably small in comparison to the price we pay for them.

Take more risks.

Justification: I’ve noticed people tend to regret the risks they didn’t take more than the consequences of a risk that didn’t work out well. Obviously, this only goes for situations where you can afford to lose what you wager. Still, I believe living an interesting life, stumbling upon new ideas, or learning new things, requires more risk than we think.

A just society is opportunity oriented, not outcome oriented.

Justification: Ensuring outcomes is problematic for two reasons. (1) Tough decisions need to be made about what outcomes are acceptable. Settling on a finite list might exclude outcomes some really desire. This privileges some people’s “good life”‘s over others, which is not consistent with a commitment to treating everyone equally. (2) Attempting to guarantee outcomes would require meddling with our lives to an unacceptable extent. Not only would this represent a gross intrusion, but it limits us. Part of our self-respect is founded upon making decisions for ourselves and living with them. To understand our social outcomes are fixed as a result of some gigantic scheme would be disheartening, and deny us an opportunity to exercise the agency that is an essential part of being human.

The best we can do is attempt to ensure everyone has the opportunity and resources at their disposal to pursue the good life as they see it. This idea is borrowed from John Rawls, and a lengthier discussion of it can be found on page 94 of A Theory of Justice.


The plan is to learn more this coming year. The thing I think is most likely to turn out false is that I hope to die in Portland. The thing I actually hope is false is that “wonderful people are rare.” The thing I’m most convinced is true at this point is “Girardian terror is real.”

Friends and strangers: hold me accountable! If you want clarification, aren’t convinced by what I’ve said, or want to chat, send a message.

Here’s to another year.

-Riley

 

An overview of online dating

Here are several fun bits and pieces from an article that appeared on MR a bit ago. We’ll start with the funny parts.

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The authors’ take on the effects of online dating on consumer behavior:

An additional knock-on effectof online datingthat initial potential mate matching is increasingly visual, leading to secular demand growth in cosmetics and photography products, while fragrance sales remain flat because their value is irrelevant in the current market. This is largely facilitated via Instagram and mobile usage, and while it is a less important point to this thesis overview, it is an area for more detailed research and discussion

On the forces driving the fundamental structural changes in the dating market:

A conservative estimate of the percentage of new relationships begun online in 2019 is at least 65%, but likely over 75%. So, online dating now produces most new relationships. Why? From the perspective of prime reproductive age individuals, cost structures (safety, monetary, time, social frictions, etc.) have shifted, with many dropping to effectively zero. Because costs (physical safety, social stigma)have been disproportionately impactful to women, their elimination has had the effect of flipping the power dynamic in the market to favor women in prime reproductive age, though the dynamic changes with age.

and an (uplifting) implication:

With the advent of online dating, women in prime reproductive age are in the dominant position in the dating market for the first time in human history.

People tend to be rude and nasty on the internet, especially in romantic contexts if there’s some level of anonymity involved. Yet, online dating seems to be a great improvement for those have been historically disadvantaged by traditional dating methods.

Relevant to the previous post

An article from one of my favorite authors. Selected quotes from the first and last sections of the article to motivate your interest.

As an example, here I’ll tell my own story about my career negotiating the hierarchy in the highly stratified system of higher education in the United States. I ended up in a cushy job as a professor at Stanford University. How did I get there? I tell the story both ways: one about pluck, the other about luck. One has the advantage of making me more comfortable. The other has the advantage of being more true.

 

In fact, the only thing that’s less fair than the meritocracy is the system it displaced, in which people’s futures were determined strictly by the lottery of birth. Lords begat lords, and peasants begat peasants. In contrast, the meritocracy is sufficiently open that some children of the lower classes can prove themselves in school and win a place higher up the scale. The probability of doing so is markedly lower than the chances of success enjoyed by the offspring of the credentialed elite, but the possibility of upward mobility is nonetheless real. And this possibility is part of what motivates privileged parents to work so frantically to pull every string and milk every opportunity for their children. Through the jousting grounds of schooling, smart poor kids can, at times, displace dumb rich kids. The result is a system of status attainment that provides advantages for some while at the same time spreading fear for their children’s future across families of all social classes. In the end, the only thing that the meritocracy equalises is anxiety.

Do give it a read.

 

The Meritocracy

 

I’ve had mixed feelings about the meritocracy lately. At the beginning of my college experience, I was squarely against it. The processes we use to develop and screen our future leaders produces morally stunted individuals who are incapable of fulfilling lives, the argument goes.

But, I can’t help noticing where these indictments of the meritocracy are coming from. They are all the “winners,” so to speak, of the competitions they decry. Ivy League professors, columnists at prestigious publications, lawyers turned-billionaires, the list goes on. What’s more, I actually like and personally admire these people. Not because of the fact they make these critiques, but because they seem to understand and value the types of things that make a human life go right.

These two facts conflict. I have immense respect for these people, so I’d like to heed their advice and reduce my participation in the system they call the meritocracy to the fullest extent. On the other hand, I cannot ignore that they are the product of it. What if the misery and aimlessness they describe going through is something of a prerequisite for the enlightened perspective they have now? Speaking pragmatically, they are only in their positions now because of the credentials they accumulated during their youth. Why should I not do the same?

 

 

 

 

Is becoming a lawyer a good investment? (part 3 and conclusions)

In part 1, we described the hypothetical students used in this investigation and calculated the opportunity cost of going to law school for each of them. In part 2, we factored in tuition and university fees and arrived the amount of income a new JD would need to earn to do “better” than their non-lawyer doppelgänger. Part 3 is where we draw conclusions. In order to do so, we’re going to revisit the concept of hurdle compensation that we developed in the last post.


Step 5: hurdle compensation, attribution, and expected salary

As mentioned above, a student’s hurdle compensation is the annual salary they would need to exceed in order to do “better” than they would have without a JD. While this figure tells us something about the costs of actually being a lawyer and how much one should earn to be better off financially in light of these costs, we can interpret it in another manner. Whatever one of our students earns in excess of their hurdle compensation is income directly attributable to their law degree.

Think about how the hurdle compensation was calculated. We took the expected fourth year non-JD income of one of the students and added overtime pay. This is pay they could have earned at their hypothetical non-lawyer jobs, meaning anything in excess is a result of their law degree. The cost of living premium is still included even though it does not represent income a student could have earned in an alternate life. It accounts for the fact some of their salaries as lawyers will be eaten up by higher than average housing.

Now, we examine each students’ expected post-JD income and see how it compares to their hurdle compensation.

Fortunately, we have good data on salaries for recent law graduates. For more than a decade, the National Association for Law Placement (NALP) has been surveying newly employed lawyers on their earnings and publishing the results. Schlunk used their 2008 report to do his analysis and I will use the 2018 data for mine.

 

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As we can see, the distribution of lawyer salaries is heavily concentrated in two areas. The NALP asserts 49.6% of salaries reported fall in the $45,000-$75,000 range, while just over 20% are greater than $180,000. As you can guess, the salaries in the high six figures are those given to new biglaw associates. The NALP also notes low salaries are under-reported, meaning the percentage of jobs paying in the 45-75k range is probably higher.

Based off of this graph, we will assume the average non-biglaw job pays $60,000 and the average biglaw one $185,000. Using the percentage chance we stipulated in part 1 of each student landing a biglaw job, we can calculate their expected first year salary and subtract their hurdle compensation to see how much income is attributable to their JD.

 

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Table 8

 

Thankfully, the results are positive. The expected income of each student exceeds their hurdle compensation, meaning on average their degree is conferring some additional financial gain. However, we must note averages can be deceiving. Solid Performer’s expected income is ~$129,000, but this is nowhere near what he will earn in the average biglaw or non-biglaw job. If he is unfortunate enough to find employment in the 60-75k range (as nearly half of all new lawyers do) his annual earnings will not exceed his hurdle compensation of ~$99,000. His law degree may have made him eligible for high paying biglaw jobs, but the alternatives are dismal given the costs. In the event he doesn’t score a biglaw job (a 45% chance), he will be worse off than if he never went to law school in the first place.

Regardless, we are going to treat the expected first year law income as the actual earnings of our students, and their incremental income as the actual income of theirs attributable to a law degree even if in specific cases the numbers may either be much higher or much lower.

Step 6: discount rates

As of now, we know what a law degree will net you your first year of employment, but what about all subsequent years until retirement? Even if we did know that, how can we value future income in today’s terms to compare it to the costs we’ve incurred in the present?

The first question we’ll tackle with an assumption. In his calculations, Schlunk assumes a 3.5% yearly growth in salary over a 35 year law career to account for increases in productivity. I see no reason to disagree, so I’ll do the same. This ignores the possibility of our students making partner or coming across fat bonuses or raises, though.

Techniques exist to answer the second question. Valuing future income isn’t as straightforward as summing it all and saying this is how much it’s worth (unless you’ve made some uncommon assumptions). Future earnings are discounted and expressed in present dollar terms in order to reflect the opportunity cost of not having the money or account for some risk to actually receiving it.

The latter reason is most relevant to our discussion. The incremental income earned attributable to the law degree is small, relative to the entire salary, and volatile. Schlunk says law students often do not appreciate the career instability of many attorneys. Not everyone gets raises and sometimes law firms “blow up.” Even if you’re an in-house lawyer, you’re as subject to corporate downsizing as any other employee.

Additionally, our students aren’t content with merely breaking even on this investment. They want as close to a guarantee as possible they will not only recoup their initial costs but make positive returns. We can think about this as them wanting the investment to pay off over a very short time horizon, which is the equivalent of applying a high discount rate to future income. Money closer to the present is much, much more valuable to them. The more they make now, the less doubt there is that law school was a bust.

These two factors make it reasonable to apply relatively high discount rates to the future income attributable to the degree. To do our calculations, we will treat each student’s incremental income as an annuity dispersed once a year that grows at a rate of 3.5%. Below are the results for different discount rates.

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Table 9

Step 7: conclusions and limitations

For context, I’ll reproduce the cost of attendance for each student.

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Table 10

For all of the given discount rates, law school is not an attractive investment. Suppose Solid Performer personally discounts future income at 17%. In other words, $100 today is worth just as much as $117 a year from now for him. If he were to attend law school under our assumptions, he would be paying $335,579 (total cost) for something that is in fact only worth $219,629 to him. Likewise, If Hot Prospect is under the impression that 12% is the correct rate (which is still significantly below Schlunk’s recommendations), she would be paying $422,140 for something that is worth $409,471. Each student would only break even if they convinced themselves something a little under 12% was the appropriate discount rate.

Does this mean law school is a poor investment in all circumstances? Definitely not. One thing our analysis neglects is the impact of financial aid and scholarships on total cost. Many law schools offer considerable assistance to students, with more than half of their enrollment receiving some type of merit or need-based funding. Clearly, the conversation surrounding law school changes significantly when you’re on a full ride versus paying entirely out of pocket.

It’s also worth repeating how averages can be deceiving. Our expected yearly income figure used to calculate the present value of a law degree captures only the average outcome of each student. We’ve assumed Solid Performer either earns $60,000 or $180,000 out of law school, but used something in between these two numbers to arrive at the salary we claim he would have made after graduation. If Solid Performer gets the biglaw job and earns the $180,000, his degree is certainly a much better financial investment, but that is not reflected in our outcomes.

The next set of limitations has to do with your author. I am an undergraduate with some time on his hands, not Herwig Schlunk, a law professor with more degrees than everyone in my family combined. The assumptions I make in this series of posts without Schlunk’s guidance are at best educated guesses and at worst ignorant stipulations. What’s more, even though I am trying my best to follow Schlunk’s analysis closely, his paper is nearly a decade old and I do not have the expertise to know to what extent his methods and assumptions are still accurate. This is an amateur attempt at something only a professional can treat with the necessary discernment.

Lastly, I expect some to take issue with the scope of this inquiry. I’ve tried to shed light on the narrow question of whether or not law school is a good financial investment, but there are clearly other reasons to be a lawyer. As mentioned in the intro to part 1, one can be motivated to practice law by the pursuit of justice or their personal vocation. I will not speculate on the ultimate reason a reader may want to pursue a JD, but our analysis suggests it should not be to make a sound investment.


 

If you got this far, thanks for reading.

I heavily recommend reading Schlunk’s original paper. While my goal was to reproduce his method with current numbers, it is almost certain I erred in some respect or missed an insightful point hidden in the original. Do give it a look for a more comprehensive understanding of how he went about answering the question.

Also, here is the Excel sheet I used to calculate everything. You can plug in different annual incomes or discount rates to get a feeling for how the results might have turned out otherwise with different assumptions.

If you have questions/concerns/feedback regarding this series of posts, feel free to leave a comment or send me an email.

riley[at]rileywilson[dot]net

Is becoming a lawyer a good investment? (part 2)

In the last post, we described the hypothetical students we are using for this investigation and considered and the type of income they would be missing if they chose to go to law school. Now, we’ll add tuition to the total cost and see how much each would need to earn as lawyers to “break even,” so to speak.


Step 3: tuition and totals

Tuition varies greatly between institutions. In the most egregious of circumstances, you can expect to pay up to $77,000 a year at fancy private law school. Yet, public law schools exist that only charge around $22,000.

From my amateur research, tuition seems to increase with the prestige of the institution. Accordingly, Also Ran, Solid Performer, and Hot Prospect will probably pay different amounts. To account for the variation, I lifted tuition information from three law schools whose standards correspond to the stated undergraduate performance of our hypothetical students. For Also Ran, a school nearly outside the top 50 in the rankings. For Solid Performer, a school hovering around the 20 mark. Hot Prospect gets the big name T14 law school with the big name prices.

I also added a couple thousand dollars extra to yearly expenses to account for books and university fees.

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Table 4

These numbers are eye-popping. For context, Let’s assume Solid Performer takes out loans to cover the entirety of her expenses. If she secures a 6.08% interest rate (the federal graduate fixed rate) and makes monthly payments of around $1,500, it would still take her 15 years to pay them off.

Adding these totals to the opportunity cost figures is truly frightening.

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Table 5

We’ll soften the blow a bit by taking into account summer employment.  Many law students are able to land lucrative summer positions that can lower the net cost of law school. In 2009, Schlunk estimated that Also Ran, Solid Performer, and Hot Prospect can each earn approximately $5,000, $7,500, and $10,000 respectively during a summer.

Rather than plug these figures into an inflation calculator, I decided to look for current data. Ziprecruiter has this helpful table on their website.

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I think it’s safe to assume Also Ran, Solid Performer, and Hot Prospect have summer earning potentials around the 25th, 50th, and 75th percentiles, respectively. Subtracting two summers of compensation yields the following total cost figures.

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Table 6

Roughly, this is how much it costs to go to law school. However, and I hadn’t actually thought about this, there are also significant costs to being a lawyer. We examine those next.

Step 4: hurdle compensation.

If you become a lawyer, it would be nice to earn more than what you would have without a JD. Financially, it would be a disaster if you invested $300,000 and three years of your life to end up with the same earning power as a similar individual who did not go to law school.

As a result, we will attempt to quantify the amount you would need to earn in order to be doing better than your non-lawyer doppelgänger. This is different than just looking at the fourth year hypothetical yearly wages calculated in table 2 of part 1. As mentioned above, actually being a lawyer entails sacrifices that ideally you would be compensated for. Imagine you make $5,000 more annually than your doppelgänger. However, you also have to live in a more expensive city than they do and pay $5,000 more in housing. Effectively, you make as much as the doppelgänger when the additional costs are considered. If you want to “actually” make $5,000 more than your twin in this scenario, you would have to be compensated for the $5,000 you spent in excess of what you would have. Thus, you would have to make $10,000 more than them.

We’ll call this figure we arrive at after adding the additional costs associated with being a lawyer “hurdle compensation.” In our toy example above, the hurdle compensation would have been whatever the non-lawyer doppelgänger had made plus the expenses tied to being a lawyer.

We will consider the cost of housing and overtime pay in calculating hurdle compensation for our hypothetical students.

Lawyers, especially high earning ones, are concentrated in a few American cities. New York, San Francisco, Los Angeles, and Washington D.C. all have ample big-shot lawyer populations and sky-high costs of living. As a result, if one of our students gets a biglaw job, they will most likely have to move to an expensive city.

Lawyers are also notoriously overworked. It’s not uncommon to only bill (charge clients for) 40 hours a week but actually work 60 or 70 hours at large law firms. Our budding lawyers should be compensated for this overtime if they so happen to get a biglaw job.

As with state taxes, I’m not even going to try and figure out an exact cost of living premium owing to the variation across cities. Schlunk assumes an additional 10% of total income is an accurate premium, so I’m going to go with that.

Getting overtime premiums involves less hand-waving and more calculation. We’ll assume the average worker puts in 2,000 hours a year (40-hour weeks), and any hours over this are overtime. We’ll also stipulate that any lawyer has to put in 200 more hours a year than average. Thus, a regular lawyer works 2,200 hours a year.

Now, it’s not unreasonable to assume that while an average lawyer is expected to work 2,200 hours, biglaw lawyers work 2,400 (46-hour weeks).

The going overtime rate is 1.5x your average hourly rate. However, each additional overtime hour is more valuable as it is taken from an ever-decreasing pool of your free time. Thus, Schlunk, and I, assume the first 200 overtime hours should be valued at 1.5x one’s average hourly rate, but the next 200 should be 2x.

Based on our assumptions about the probability of each student getting a biglaw job, Also Ran will need the cost of living premium and 400 hours of overtime pay 20% of the time, Solid Performer 55% of the time, and Hot Prospect 90% of the time.

Here are the totals:

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Table 7

As we can see, our three students must make more than approximately $64,000, $99,000, and $135,000 respectively in order to “do better” than their non-lawyer counterparts.

However, these figures do not tell the entire story. In the next part, we’ll consider discount rates and conclude whether the JD was a good investment.

Is becoming a lawyer a good investment? (part 1)

Like many in unmarketable majors, I’ve briefly toyed with the idea of becoming a lawyer. Not necessarily because I have a deep interest in the law, but because going to law school is the ultimate vindication for your humanities degree.

My personal interest passed quickly, but curiosity lingered about the profession. Why do people become lawyers? Is it really as miserable as I’ve heard? Is it even a sound financial decision?

Thankfully, someone has already answered the last question. I recently came across a paper from law professor Herwig Schlunk on whether going to law school is a good investment (spoiler alert — it isn’t).

The paper is a little outdated, being written in 2009, but I wanted to try and reproduce his analysis as best I can with current figures to see if the conclusions change. This post is the first in a series where I do just that. I’ll be following his steps as closely as possible, but will not be comparing my end results to his.

Note that Schlunk, and this series of posts, is attempting to answer the question of “should I go to law school?” from a purely financial perspective. Money aside, people might attend because they feel they could be good lawyers, or they want to contribute to a more just society. Non-monetary reasons are certainly valid, even applauded, but the costs of any type of graduate school should be considered before a prospective student writes the check or takes out the loan. Schlunk acknowledges that becoming a lawyer confers numerous benefits beyond increased earning power, but as he puts it, “you can’t eat prestige.”


Step 1: the students

Because the answer to any major life decision is highly particularized, it’s foolish to perform one set of calculations trying to settle the matter and claim the results apply to everyone. In an attempt to be less foolish, Schlunk stipulates three hypothetical undergraduates with different backgrounds and considers their situations in parallel. (Note: I’m borrowing Schlunk’s names for the students out of convenience).

Let’s meet them.

Also Ran is an undergraduate at a middle-of-the-pack university. He achieves above average grades in a relatively nonmarketable major and could have earned $47,000 in a non-legal job after graduation. He, by Schlunk’s account, “claws his way” into a second/third tier law school and has about a 20% chance of getting a lucrative “biglaw” job after graduation.

Solid performer went to a better college and made good grades in a more marketable major (think economics vs English). He makes his way into a mid tier law school but could have earned $66,000 had he chose to jump into the workforce. As a JD, he has a 55% chance of getting a cushy biglaw job.

Last, we have Hot Prospect. She is the most conventionally successful of the bunch, having a stellar academic record in a marketable major (CS/math/engineering) at an elite undergraduate institution. She gets into another elite university for law school but could have made $83,000 in her first year out of undergrad. However, biglaw jobs aren’t a certainty for anyone, including her. She has a 90% chance of getting one after law school.

Step 2: opportunity cost

If someone decides to go to law school, or pursue any other type of post-graduate education, they are missing out on potential wages. Of course, not all of what you make goes straight into your pocket. In the table below, I subtract various taxes from the salaries each student could have made in their first year of employment. The FICA tax rate I used was 6.2%, and all three students happened to fall in the same Federal income tax bracket given their first year salaries.

State taxes are trickier as schemes vary wildly across the nation. States like Minnesota and California have a multi-tiered system with differing marginal tax rates. Others, like Massachussets and Utah, have a single rate for all income. To further complicate things, Texas, Nevada, Washington, and Florida have no state income tax at all.

To simplify my calculations, I’ll make a move similar to what Schlunk did and assume a flat 4.5% state tax rate. This might significantly over or understate the amount of taxes you would pay in most states, but it’s an accurate figure if you’re living in Illionois, for example, with a 4.95% flat rate.

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Table 1

Based on the assumptions above, this is the opportuntity cost for each student of going to law school for a single year. Note that it typically takes three years of schooling to get the degree. I could multiply each figure by three, but that wouldn’t account for raises in pay commensurate with increases in productivity. In his calculations, Schlunk accounts for this by bumping pay 3.5% a year but acknowledges this figure might be too low. I assumed a 4% growth in yearly wages and ran the numbers again.

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Table 2

The hypothetical fourth year is included to illustrate what kind of earnings a potential JD could expect her fourth year post-undergrad had she joined the workforce instead of going to law school. Later, we will compare it to what she would likely earn as a freshly-minted lawyer.

Now, the (rough) financial opportunity cost can be obtained by summing the first, second, and third year after tax incomes.

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Table 3

Already, law school isn’t looking good. The financial benefits must be large in order to justify passing on $110,000-$185,000. Unfortunately, this is only the opportunity cost. In the next part, we will consider the greatest explicit expense to getting a JD.