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Comment by danieltillett | Hacker News Reader

I am wondering what is the cause and what is the effect here. Do people become more educated because they become wealthier or do they become wealthier as they become more educated?

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The evidence is at best neutral for education boosters which is really weird. Education increases as the economy grows but it doesn't seem to have any effect on economic growth itself.

http://econlog.econlib.org/archives/2012/10/did_nations_tha....

Did Nations that Boosted Education Grow Faster?

No. Each dot in the graph below represents a nation: Change in education on the x-axis and change in per capita GDP growth on the y-axis. Between the 60's and the 90's every country in this sample boosted its average years of education--it was a golden age of alleged human capital investment. Some nations boosted schooling more, some less. How did that turn out?

That guy bothers me.

What he doesn't account for is that, most likely, a place that would have to invest in education is not a developed nation in the first place. However, whatever you produce and especially export to the developed countries most likely comes from low-skilled labour to begin with, because that's how capitalism organised its centre/periphery-model of outsourcing labour costs. A boost in education does nothing to change the underlying power relations and economic networks that govern generation of wealth, since you still have to rely on exporting products that come from cheap labour, whether your workers can now read/write or not. This is especially true for an increasingly more globalised world, and since the numbers only take into account anything past 1960, I get the feeling he is omitting rather a lot that would have to be addressed.

The graph is odd. According to the label, the Y axis is change in economic growth (probably meaning change in change in GDP). Honestly, I don't find it that surprising that the dots are all over the place. Economic growth is a variable that depends on a lot of things, you can think of it as G = f(education) + N, where N is basically random noise with a variance that is likely quite a bit higher than differences in f(education). So then if you measure G in 1960 and again in 2000, you really aren't measuring anything about f(education), you're only measuring noise.

It would be much more interesting to see a comparison of educational standards and GDP growth (not change in GDP growth) over that time period. But even such a graph would be fraught with problems, mainly due to the effect of less developed countries having an easier time in "catching up" to developed countries.

Anyway, as it stands I would basically throw that article in the garbage bin. Usually, I would give the author the benefit of the doubt and take more time to think about why my interpretation may be wrong, but this is an economist (maybe?) writing on a website with "economics and liberty" in the title. That's a huge warning sign for crack-pottery with an agenda.

The graph is "odd" because it's looking for causality not correlation. If more developed countries are more educated all it proves is that education is a normal good and that people consume more of it as they get richer. That would prove nothing about whether education causes economic growth.

Your point about noisy measurements, such as it is, applies to all macroeconomic measurement. If you're willing to proclaim radical scepticism about all macroeconomics fine. Otherwise this is just an isolated demand for rigour.

The authour is on fact an economist and he references two different economics papers in the post, with links in support of his argument. And of course he has an agenda. Everyone has an agenda. The agenda of the agendaless is continuation of the status quo. Neutrality is an illusion.

I took a class on international economic development when in grad school. The class spent some time going through the various theories of economic development, and what has and hasn't worked in terms of aid programs. One of the surprises in the class I learned was that education isn't a big driver for economic development. That's not to say education isn't important, but that if you make a huge effort to education your population, the payoff isn't going to be that great, other factors need to be considered.

Interesting. This would seem to suggest that wealth drives education. Of course the problem is now how to make the world wealthier.

I think the take away was that you need to give citizens the freedom to meet each other's needs instead of forcing top down solutions, make it easy to start businesses, and don't protect entrenched interests (e.g., tax cuts and regulations that protect current industry). I may be remembering that through a lens of my own political leanings, but what I learned in that class helped shape those political leanings as well.

I seem to remember that stable institutions are the most important. Infrastructure, policing, that kind of thing.

Yes, I think you're right on those as well. I remember stable macroeconomic policies being a big one too. We went through some fairly convincing studies showing how damaging hyperinflation and unserviceable government debt can be to an economy.

My point was that, as long as the politics are fairly conventional, the quality of execution of policies are orders of magnitude more important than whether those policies lean left or right.

On a macro level over the long run I find that hard to swallow. Economic development is essentially "learning to do more with less". Economic growth IS learning.

Paleolithic humans had all the basic resources we have today, except they lacked our education.

Education seems to be just one cog in the overall scheme of a functioning, productive society. Without well managed public and private sectors in place to take advantage of an educated, skilled workforce and economic policies which truly benefit the developing country, the likely outcome will be large scale brain-drain.

I see what you mean. Without the rule of law, effective policing, healthcare, transportation networks, etc, investment in education meets resistance to use. The best Intel engineer can't make microchips if sent back to a Paleolithic beach. She's still missing civilization.

This always frustrates me with the debate around how to help developing economies. Widespread education isn't really needed until pretty late in an economy's development. Widespread education is only necessary in a post-industrialized economy. Developing nations will do fine with basic literacy/numeracy until their economies are sufficiently advanced as to require higher levels of education to advance.

How does a developing nation become post-industrialized with basic literacy/numeracy. Honest question.

Foreign investments + a small elite that can order people around. The education level in Britain during the industrial revolution was pretty low, and it follows that any higher would be unnecessary for a developing country.

It would be different if you wanted to skip the sweatshop-stage, but I don't think any country of any size really has.

Making use of higher education requires an economy in which they are useful, and to build such an economy requires enormous capital expenditures in infrastructure, manufacturing goods etc. What good are skills, if you have neither the tools of the trade nor the problems to apply them to?

I would add to that the majority of citizens in the US were illiterate up until the early 1900s. The country was pretty deep into the industrial revolution at that point.

\curious What are the big drivers?

AFAIK corruption is a fundamental problem with aid; and micro-finance has worked well.

What were the example countries looked at in that class? Land reform is plainly a crucial factor for general economic development. (Japan, south Korea, and Taiwan all had that after World War II.) But I have also seen discussions of education that point out that GENERAL provision of good primary education (those same three countries) far outperforms providing higher education only to members of the elite (many countries in Africa and Latin America). I'm not sure that I buy that general provision of sound primary education makes little difference. I have lived in east Asia, and I get the distinct impression that it makes a LOT of difference.

I think it was across the board, but there might have been some nuances regarding level of education (primary vs higher) to it as well...it was a while back. I also remember being skeptical how exactly education level is measured in each country.

I'd say it is both, a country is developped by its people and its people developped by the country. We created wealth which permitted better education which permitted better wealth and so on

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