Shelly Lundberg on Educational Inequality and Returns to Skills

test-prep
DuPRI‘s seminar series in the fall started with a fascinating talk by Shelly Lundberg (UCSB) on her recent research on differential returns to skills in different environments. Abstract is below:

I examine the effects of cognitive ability and personal traits on college graduation in a recent cohort of young Americans, and how the returns to these traits vary by family background, and find very substantial differences across family background groups in the personality traits that predict successful completion of college, particularly for men. The implications are two-fold. First, the returns to non-cognitive traits may be highly context-dependent. Second, policy discussion concerning educational inequality should include, not just the possibilities for re-mediating the skill levels of poor children, but also approaches to changing the environments that limit their opportunities.

Inequality in education in the US is widely documented and extensively researched. Policy interventions have often focused on helping children from disadvantaged backgrounds to develop skills which will supposedly help them succeed, but the effect of family background is largely viewed as a secondary source of educational inequality.

The skills of children are often measured through reports of behavior by teachers or parents. These often include internalizing vs. externalizing behaviors, antisocial behaviors, and tendency towards violence (e.g. fighting with classmates). While this is convenient, using behaviors as proxies for skills is problematic. Children’s behaviors, like adults’, are determined not only by their personal traits but also by the environment and constraints they are faced with.

Lundberg used the widely cited NLSY data in the US. NLSY data contain measurement of the “Big 5” personality inventory which are acknowledged metrics for personality in psychology. The five dimensions of personality traits are openness to experience, conscientiousness, extroversion, agreeableness, and neurotic-ism (emotional stability). Lundberg took the measures of personal traits for people from different backgrounds and estimated the correlation between these traits and educational attainment (defined as graduation from college, and broader educational achievement). She divided the sample into four groups according to two criteria: 1) mother’s education (some college and above vs. no college), and 2) whether the child was living with BOTH BIOLOGICAL parents at the first wave of the survey. These categorization breaks the sample down into four groups, with people having highly educated mothers and living with both biological parents being the most advantaged one.

A simple model about children’s educational outcome was presented. Children’s educational achievement is a function of focus and information. Focus is the personal efforts and information is the resources available. Her argument was that children in more advantaged households have more resourceful parents who will make their “focus” more rewarding. Parental resources are also assumed to be a perfect substitute for the information children can get at school. This assumption can be challenged if parents with higher social-economic status (SES) can improve the quality of the information.

Her findings suggest that people from more advantaged families receive a higher return (in terms of education) on conscientiousness, while people from disadvantaged backgrounds receive a higher return on openness. These patterns are the same regardless of gender, though the effects appear to be more distinct for men. There are racial differences as well — black men seems to receive a higher return on their openness.

It is not surprising that family background affects the returns to your skills. Being born in a rich and educated family gives a person access to good education, nice living environment, less obligation to shoulder family responsibilities (though this might not be a good thing) and more opportunities to explore personal interests. The resources of the parents have an instrumental impact on how children perceive which skills will be useful. Expectations of the parents also matter. If parents see the education of their children as an investment, they would invest more in promising children, thus making the returns to “focus” higher for more gifted children. Peer effects (spillover) matter as well. The level of openness should matter more for someone who grow up in a poor neighborhood where a role model is nonexistent — he might assume this is the way it is and never dare to push himself nearer to success.

Although the topic is tremendously interesting, there is a caveat. These results cannot be interpreted as causality because personality may well be endogenous. Although personality seems to be stable during an individual’s lifespan, there is no definitive evidence that life-cycle events cannot change one’s personality. Moreover, some personal traits (e.g. openness) might interact with educational attainment and evolve. For instance, being in college might make an introverted person more open to new ideas and more adaptable to new cultures, which in turn increases his earning potentials.

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