Naked Economics by Wheelan, Charles (best books to read .TXT) 📗

student who entered Yale, Swarthmore, or the University of Pennsylvania in 1976 earned $92,000 in 1995; the average student who entered a moderately selective college, such as Penn State, Denison, or Tulane, earned $22,000 less. That is not a particularly surprising finding, nor does it get at the question of whether the students at schools like Yale and Princeton would earn more than their peers at less competitive schools even if they played beer pong and watched television for four years.

So Mr. Krueger and Ms. Dale took their analysis one step further. They examined the outcomes of students who were admitted to both a highly selective school and a moderately selective school. Some of those students headed to places like the Ivy League; others chose their less selective option. Mr. Krueger and Ms. Dale’s chief finding is best summarized by the title of the paper: “Children Smart Enough to Get into Elite Schools May Not Need to Bother.” The average earnings of students admitted to both a highly selective school and a moderately selective school were roughly the same regardless of which type of college they attended. (The one exception was students from lower-income families for whom attending a more selective school increased earnings significantly.) Overall, the quality of student appears to matter more later in life than the quality of the university he or she attended.

Is it irrational to spend $150,000 or more to attend an Ivy League university? Not necessarily. At a minimum, a Princeton or Yale diploma is the résumé equivalent of Roger Ebert’s “thumbs up.” It pronounces you highly qualified so that others in life—employers, spouses, in-laws—will have fewer doubts. And there is always the possibility that you may learn something while huddling for four years with the world’s great minds. Still, Mr. Krueger offers this advice to students applying to college: “Don’t believe that the only school worth attending is one that would not admit you…. Recognize that your own motivation, ambition and talents will determine your success more than the college name on your diploma.”

The notion that bright, motivated individuals (with similarly motivated parents) will do well, however or wherever they are schooled, is often lost on America’s school reformers. In Illinois, each fall is greeted with the release of the state’s school report cards. Every school in the state is evaluated based on how well its students have performed on a battery of standardized exams. The media quickly seize on these school report cards to identify the state’s “best” schools, most of which are usually in affluent suburbs. But does this process really tell us anything about which schools are the most effective? Not necessarily. “In many suburban communities, students would do well on standardized tests even if they went to school and sat in a closet every day for four years,” says University of Rochester economist Eric Hanushek, an expert on the somewhat tenuous relationship between school inputs and student outcomes. There is a fundamental piece of missing information: How much value is really being added at these “high-performing schools”? Do they have exceptional teachers and administrators, or are they repositories for privileged students who would do well on standardized tests regardless of where they went to school? It’s the Harvard question all over again.

This chapter started with a serious social issue, and so it will end. Racial profiling is an information problem. There are two simple questions at the heart of the issue. First, does race or ethnicity—alone or in conjunction with some other circumstance—convey meaningful information related to potential criminal activity? If so, what do we do about it? The answer to the first question gets most of the attention. After the attacks of September 11, one could certainly make the case that thirty-five-year-old Arab men posed a greater risk to the country than sixty-five-year-old Polish women. Police officers have long argued that race can be a tip-off; well-dressed white kids in poor black neighborhoods are often looking to buy drugs. Criminal organizations have racial or ethnic affiliations. At the same time President Clinton was declaring racial profiling “morally indefensible,” the website of his drug czar, Barry McCaffrey, was doing just that. In Denver, the site noted, the heroin dealers are predominantly Mexican nationals. In Trenton, crack dealers are predominantly African-American males and the powdered cocaine dealers are predominantly Latino.8

Indeed, we all profile in our own way. We are taught from a young age that one should never judge a book by its cover. But we must; it is often all we get to see. Imagine you are walking in a parking garage at night when you hear footsteps behind you. Ideally, you would ask this person for a résumé you and he would sit down for coffee and discuss his goals, his job, his family, his political philosophy, and, most important, the reason he is walking behind you in a dark parking garage. You would do a criminal background check. Then, with all this information in hand, you would decide whether or not to hit the panic button on your key ring. The reality, of course, is different. You get one quick glance over your shoulder. What information matters? Sex? Race? Age? Briefcase? Clothing?

I’ll never forget my own experience as a victim of racial profiling. I boarded a westbound bus from downtown Chicago just as it started to get dark. Chicago is a very segregated city; most of the neighborhoods west of downtown are predominantly African-American. I was wearing a suit, and after a few blocks I was the only white guy on the bus. Around that time, an older black woman asked kindly, “Oh, are the Bulls playing tonight?” The Chicago Bulls play at the Chicago Stadium, which is also directly west of the city center. This woman had inferred, innocently enough, that the only reason a white guy in a suit would be on this bus around 7:00 p.m. would be to go to a Bulls game. Obviously it was unfair and potentially hurtful for her to