Greg Mankiw's Blog: Educating Oligarchs

Only very slightly, which is the point that Krugman et al. are making. The main determinant of whether you, personally, are in the top 1% is whether your father was.

> I have not seen any data on this, but I am willing to bet that the top 1 percent are more educated than the average American; while their education did not ensure their economic success, it played a role.

Mankiw is doing what is called out in this article as bullshitting:

http://nymag.com/daily/intel/2011/11/inequality_and_bullshit...

Mankiw is bullshitting. He is attempting to obfuscate a fact which he knows to be true, by throwing a bunch of other half-truths (of course education has some increasingly minimal effect on your life outcomes; that will always be true, it will still be true even when that effect is a hundredth of a percent) and seeing if any of them stick. Mankiw is fully aware that he's bullshitting.

The purpose of his post is to give people who are already inclined to believe the whole thing is a "liberal plot" a handhold for their beliefs, a rope to grasp at. He knows it's fake, but if you WANT to believe that inequality isn't increasing due to a class of crooks running the U.S. for their own benefit, now you have something to hang your pre-existing belief on, courtesy of Mankiw.

What an embarrassment.

How much of Mankiw's wealth is due to his education, and how much to the industry structure's ability to make people pay $233 for his textbook?

http://crookedtimber.org/2011/11/04/occupy-greg-mankiw/

http://www.amazon.com/Principles-Economics-N-Gregory-Mankiw/...

It should not be that hard to take income (or labor income) and regress against educational level and get a pretty good sense of how much inequality is related to educational achievement, and how returns to education have changed. My gut feeling is it explains some of it, but education has not that much to do with the vastly increasing income share of the top 1%. One man's 'stochastic' is another's 'uncorrelated'.

http://krugman.blogs.nytimes.com/2011/11/03/inequality-trend...

The 1% are more educated than average, but not nearly enough to support this argument.

Education gives you a better chance at a huge jump into higher income, but not enough to support this argument.

It's not a coincidence that really rich people have enormous initiative, but rarely enormous education (often including dropping out before they get a degree).

One possible underlying common is inheritance: I'd be willing to bet that the child of a family in the 1% is much more likely to be in the 1% in adulthood, even if they drop out. And of course, a child in a 1% family has much more chances of being able to afford higher education.

Citing from The Inheritance of Inequality:

Recent evidence points to a much higher level of intergenerational that was previously thought to be the case. America may still be the land of opportunity by some measures, but parental income and wealth are strong predictors of the likely economic status of the next generation.

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.115...

Mankiw is saying that the education input into that equation has highly variable returns to the individual, but the average of incomes is rising in the line you'd expect from education.

Basically, Krugman's talking about the median, Mankiw's talking about the mean. I think the interesting question is why they've diverged much more radically in the last 3 decades than the preceding 4-5.

PS Mankiw's intro book is awesome.

That half concedes the original opposing point.

> think of the return to education as stochastic

To say that the effect of education is stochastic means it includes some either purely random factor, or something else not understood or not considered -- i.e. the thing having a big effect is not the basic factor of education but something else. Well, that really does seem to concede the original opposing point.

For instance, how would this correlation change if companies no longer required a degree for hiring? It would change a lot.

That aside, I know many people in the top one percent. Many of them have a far better education than I do, and yet they're idiots. Granted, they're idiots with a lot of money. And also granted, when you have a lot of money you don't need an education.

Besides all that, the article is, as jellicle said, bullshit. My other half's an economist at the Bank of England. She read it and burst out laughing. 'Nuff said.

The upper class (as opposed to "the rich", which is a much larger and looser set) is a socially closed, parasitic network of people who maintain position by peddling favors and influence, and who have done a great job (in comparison to historical counterparts) of making the process appear meritocratic, even though hard work and education are actually contrary to their values. Now, not all rich people are upper class (Jobs wasn't, Gates is debatable) or parasitic crooks. Most rich people aren't. Likewise, not all upper-class people are rich (although they could easily become rich, or famous, if desired).

The reason average people in the US are so parasite-friendly is that, when they think of "rich people", they think of scaled-up versions of the $500,000-per-year neurosurgeon (statistically "top 1%") or small businessperson who has been working her ass off since age 4-- not scummy investment bankers and well-connected influence-peddlers (e.g. the Bush family). If they understood how society actually works, they wouldn't fall for that ruse.

No one wants to "soak the rich". On the other hand, most of us who are awake deeply desire an end to the culturally underaccomplished, corrupt plutocracy that has brought a nation to epic embarrassment and idiotic, endless war to two foreign countries.

it will always be the case that politicians are more responsive to those with money, especially with the current judicial doctrine in the USA, that money is speech and therefore all attempts to regulate its use in politics is basically unconstitutional. that's the real issue with wealth inequality.

Mr. Mankiw is just arguing sideways to Mr. Krugman by making the very obvious point that more education betters your life's odds. And since Mr. Mankiw is a very bright guy, I can't help but think that he's doing this on purpose to muddy the discussion.