Tuesday, November 8, 2011

Want to join the 1%? Enroll now!

In a recent blog post, Greg Mankiw posits that education is the key to closing the income gap, allowing upward mobility for any regular 99%er to join the elite 1%. According to Mankiw, working hard in school improves the odds that an individual is able to join the 1% or at least significantly increase their earnings potential. Education then closes the income gap and smoothes out inequality.

But the question arises: if college enrollment has been steadily increasing over the years, why do we still have the highest income inequality in decades?

Let’s give a closer look at Mankiw’s claim about the great equalizer that is college. In this claim, he fails to acknowledge that access to education is often determined by the income of a potential college freshman’s family. Simply put, Mankiw fails to acknowledge that barriers to access exist.

A 2007 report by UCLA on entering freshman found that the median income of the families of was 60% higher than the national average in 2005. Further, at institutions that may appear to increase the probability of joining the upper-crust 1%, namely Ivy League institutions such as Princeton, Harvard, and Yale, evidence shows the acceptance of people with incomes in the bottom 50th percentile is exceptionally low around 10-12%. A recent Georgetown study reported on by the New York Times that within the 2010 freshman class, drawing from “193 of the country’s most selective colleges”, only 15% of the freshman class came from the bottom 50% of the income distribution and 67% came from the top 25% of the income distribution.

With those reports in mind, it becomes quite clear that for Mankiw’s claim is unsubstantiated. The idea that higher education is a means towards great income equality is solely dependent on having no barriers to access for all levels of income and socio-economic groups. Unfortunately, that is simply not the case. Unless the American educational system is drastically restructured to provide adequate college preparation across all income levels and proportionally accept students from the bottom percentiles it is likely that the distribution of higher education and wealth with remain significantly skewed in favor of the 1% and the already wealthy.


  1. Also, what about the commitment to under-educate significant numbers of individuals - in order to populate the permanently unemployed class that our current system seems to require, and to work in the minimum wage jobs it demands?

  2. It does not require Mankiw to tell us that education is 'important' in closing the income gap. However, his 'economics' tells us that returns to education are not deterministic but stochastic.This is just a sophisticated way of saying that the future is uncertain.

    In any case, access to education is a significant barrier. Moreover, Mankiw seems to assume/believe he lives in a 'just' society where 'merit' is rewarded; this seems to be the neoclassical world he keeps writing about. Conflict of interest, power relations, gender politics, etc are forgotten.

    Finally, Mankiw assumes that employment will automatically be created. Something like Say's law. When people get educated, jobs are also automatically created for them. Classic case of supply (of educated workforce) created demand (for educated workforce).


  3. This comment has been removed by the author.

  4. This comment has been removed by the author.

  5. Julia, I think you are really hitting on something.

    There are lots of capitalists out there who's businesses depend on low wage labor. So it seems like there is a huge incentive for those industries and other related industries to lobby for and maintain a system that shuts a lot of people out.

    While nobody is lobbying for this explicitly (hopefully) it is being done implicitly all the time via new fees, higher tuition, prohibitive application fees, et cetera....

  6. Luke, Julia -- I suppose it's kind of like a "Reserve Army of the Unemployed" - type of argument but applied to education. I wonder what evidence there is to assert such a claim, however.

    Alex's point seems more substantiated -- to wit, rising education levels are in no way a guarantee that the education will actually be put to productive use in society. I think the rise of finance is a great example of that idea :):)

  7. I've really always hated the education-is-key argument. Yes, having a college degree increases an individual's chances of having a higher income than s/he would absent the degree. But it (quite obviously) does nothing to change the dynamics of capitalism. I mean, seriously, is anyone going to argue that the cause of recessions is failure to educate? That's about as stupid as saying the explanation for high unemployment is an outbreak of laziness. Even more fundamentally, nothing about education for individuals changes the class structure of capitalism. Sure, education might (over and above raising your income) give you the chance to vault yourself out of the working class (through connections, etc.) But there still has to be a working class for capitalism to function.
    So the whole education meme just reinforces the myth that, hey, if you haven't made it, it's your own fault. I hate it.

  8. Mark, I wonder if that is because educational structures are mostly designed to supply the components of a good capitalist system - producers, consumers, employees and management. I might argue that an education that has a deeper purpose - such as developing critical thinking, encouraging creative imagination, increasing an appreciation for informed risk and magnificent failure, modeling generous relationship and so on - could cause the dominance of this economic model to evaporate rapidly. I'm suggesting that perhaps the link between education and "productive use" might be constrained by the limitations in how both those terms are imagined and manifested.

  9. So while I do agree that education is NOT the silver bullet that will end income inequality, I also think that pointing the finger at the university level is not the right direction either.

    I would also like to point out that while college degrees are expensive, if we look at the past century or half century, we see a much different problem. More than ever, our merits determine where we go to college - not just our parents' checkbook. Notice average SAT scores at Harvard since 1900 to see an example.

    In other words, what is more important is to study the change from year to year (the book Bobo's in Paradise by David Brooks discusses America's change to a meritocracy), and accept the fact that education starts well before college.

    The failure of our public education system is the failure of our childhood educations. Until we have meaningful reform at that level, we can never expect to create a more productive, wealthier workforce.

  10. Trey, I totally agree that there is a lot to be done for public primary, middle, and high school education.

    It certainly seems as though America is more of a meritocracy but you have to ask is it a significant movement towards a true meritocracy? I am inclined to say its not as much as you would like to think. The New York Times article that is linked to in the article does a great job of pointing that out,

    "[O]nly 44 percent of low-income high school seniors with high standardized test scores enroll in a four-year college, according to a Century Foundation report — compared with about 50 percent of high-income seniors who have average test scores."

    Furthermore, one should also ask to what extent are those standardized test scores really representative of merit? Often times students from wealthy families have access to test coaching and study programs.

  11. Brian Tamanaha over at Balkanization has been recently blogging about debts accumulated by those seeking law degrees. Seems some profs and least 1 dean are sceptical that debt would be a problem for a law school graduate, after all shouldn't they become part of the 1% elite to whom debts are just a peccadillo.
    Tamanaha highlighted 1 actual human being who is a law graduate confirmation that, indeed not all graduates join the well paid privileged elites:


  12. Sociologist of education David Labaree has constructed a plausible heuristic argument for the view that education is unlikely to lead to social mobility. One can read it in this paper: http://www.stanford.edu/~dlabaree/publications/What_School_can%27t.pdf
    starting on page 4 (the section on Social Mobility). Labaree rightly points out that some education-leads-to-equality arguments ignore aggregate effects and credential inflation.

    That said, increasing returns to higher education should be accounted for, but I would like to see returns decomposed by degree, institution and student performance to ensure that they're not unduly distorted by certain high earning majors from certain universities.

  13. Francisco, you might find this link interesting:


    It outlines unemployment rates and salary levels per college major, as compiled by Georgetown.

    And Luke, I absolutely agree with you. Not only can test scores be misleading, they can also be a flat out lie. Take my homestate of Kansas. We report relatively high literacy rates. If you dig a little bit deeper however, you notice that the state's definition of "literacy" is well below what you and I would consider literate.

    I think every person in the United States should have a right to a legitimate education. The moral of the story is that I think is that government intervention can never deliver the same quality education to every person without implementing simple economic principles to acknowledge competition in quality and price within a marketplace.

  14. "More than ever, our merits determine where we go to college - not just our parents' checkbook. Notice average SAT scores at Harvard since 1900 to see an example."

    @Trey: If our merits (as defined by SAT scores) are determined by our income, is it really fair to say it's our merits which are determining admission to universities? It seems like our parents' checkbook have a lot to do with our SAT scores.


  15. Imaginativeducation: I agree with every word (I thought I had posted that above, but it doesn't appear.)
    Don't have much more to say than that. I think you are dead on. Somewhat similar to what Bowles and Gintis had to say in Schooling in Capitalist America, though, of course, you're coming at it form a different perspective. (I have some familiarity with Waldorf education, though only some.)
    The idea that a given mode of production needs institutions that serve it should not be controversial. You don't need a so-called "conspiracy theory" to account for that.