Edward Conard

Top Ten New York Times Bestselling Author

  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
Upside of Inequality Oxford Unintended Consequences

AI Summary. Long-running U.S. tests show population average reading scores moved from 255 to 256 out of 500 and math from 266 to 271, despite educational attainment rising more than three years. The author argues that if added schooling has not raised productivity, measured total factor productivity growth has been understated, shrinking the apparent "Great Stagnation" by about a third.

Maxwell Tabarrok Maximum Progress
Date Posted:
Is Database:
Database
Is Important:
Important

.@MTabarrok argues that “zero improvement in the population average score” in math and reading since the 1970s implies that growth accounting has overestimated growth in human capital, understating 2023 TFP relative to its post-1973 trend by up to ⅓.

Has productivity growth been understated because added schooling didn't raise skills?

Core argument: Average U.S. reading scores moved from 255 out of 500 in 1971 to 256 in 2023 and math scores from 266 to 271, essentially zero improvement despite educational attainment rising 3+ years since the 1970s.

Math and reading scores on tests that have been surveyed over longer periods also show essentially zero improvement in the population average scores. The average score on the reading test in 1971 was 255 out of 500, in 2023 it was 256 and math scores went from 266 to 271. Educational attainment has risen by 3+ years since 1970s but population level reading and math scores have barely changed, and scores within educational attainment groups have fallen. As more people are pushed through lowered standards to a high school diploma, the wage premium to this degree has fallen, suggesting that much of its value was in the differentiating signal rather than skill gains. If this story is true, and more education hasn’t been raising productivity, then all the GDP growth we thought was due to more skilled workers is actually coming from somewhere else. That means we’ve been undercounting TFP, and technological progress for decades. If we take the SF Fed TFP data and remove the adjustments they make for gains in human capital (based mostly on rising educational attainment), we get something that looks like this. The Great Stagnation is shrunk by about a third!

Takeaways by Macro Roundup® AI

  1. Average U.S. reading scores moved from 255 out of 500 in 1971 to 256 in 2023 and math scores from 266 to 271, essentially zero improvement despite educational attainment rising 3+ years since the 1970s.
  2. Scores within educational attainment groups have fallen, and the wage premium to a high school diploma has declined as more people are pushed through lowered standards, suggesting much of the diploma's value was differentiating signal rather than skill gains.
  3. Removing the SF Fed's human capital adjustments, based mostly on rising educational attainment, from its total factor productivity data shrinks the Great Stagnation by about a third, implying TFP and technological progress have been undercounted for decades.

Related Articles:

  • Productivity During and Since the Pandemic — Total factor productivity growth since early 2021 has run only slightly above its 2010–19 average, suggesting the 2020 productivity surge reflected cyclical dynamics layered on a continuation of the slow pre-pandemic trend. Productivity has since grown somewhat faster than the authors' analysis predicted, but remains well below the 1995–2004 pace.
  • Marginal Returns to Public Universities — Using admission-score cutoffs across all 35 Texas public universities, the author estimates that marginally admitted students complete an additional year of four-year education, are 12 percentage points more likely to earn a bachelor's degree, and earn 5–10% more than marginally rejected peers, with gains driven by students who otherwise would not attend a four-year school.
  • Toward An Understanding Of The Returns To Cognitive Skills Across Cohorts — The authors find that the estimated decline in labor market returns to pre-labor-market cognitive skills for white men across two U.S. youth cohorts depends critically on the widening and increased left-skewness of the test-score distribution, with declines appearing only at the lower end of that distribution.
Showing 74 database articles primarily about Growth