Age and Academia

Over the past few weeks, I have received several emails from people now in econ grad school, or considering econ grad school, who are a bit older than most grad students. The most recent is from an electrical engineer, who wants to return to school to get a PhD in economics and then pursue an academic career. He writes:

My current concern is that another professor mentioned that getting an academic job is very difficult for a new phd who is around 40 (what I would be upon completion). What are your views on this? Do you think this is true, somewhat true, or does it just mean stepping down a tier or two?

There may be some truth to the claim, but if you are passionate about the field and ready to commit the roughly five years that a PhD takes, I would not be deterred by age.

An economist I know named Bronwyn Hall went back to grad school later in life after a career in computer software (admittedly, econometrics software, so it was not completely unrelated). She earned a PhD in economics in her early 40s and now has a distinguished career as a full professor at UC Berkeley.

Of course, stories like this are rare. One reason is that there is a life cycle to creativity, which may make it harder to start a research career at an older age. In addition, few people in middle age want to start leading the life of a grad student. (I know I wouldn't.) But age discrimination, while a real possibility, is not pervasive enough in my view to stop a person from getting a PhD and pursuing an academic career in economics if he or she has the talent, preparation, and drive.

If other econ academics out there have views on this issue, please post in the comments section.

Reich on POTUS and the PBGC

Pigs fly! Hell freezes over! Actually, not, but an even more remarkable event did occur: Robert Reich found something nice to say about George Bush. He begins as follows:

The President�s approval ratings are so low I thought I�d find something to compliment him on. It took a bit of a search, but here it is. Congress is debating what to do about corporate pension plans. The President wants a law that forces companies to fully fund their pension obligations to their employees. He�s right.

Corporate pension plans don�t have nearly enough money to pay what the companies have promised their workers. We�re talking big money here -- a shortfall of over $450 billion. And if companies can�t pay up, you know who�s left holding the bag? Not only 44 million Americans who won�t get the monthly pension payments they were promised. You and I and every other taxpayer will also be on the hook.

You see, there�s a government agency called the Pension Benefit Guarantee Corporation that�s supposed to insure most of these promises. But the PBGC itself is already deep in the red, to the tune of almost $30 billion.

Read the rest here.

Universal Preschool

Earlier this week, the Washington Post reported:

From coast to coast, states are pushing to get more 4-year-olds into classrooms...

A few states have made public pre-kindergarten open to all; others are debating the expansion. Virginia Gov. Timothy M. Kaine (D) proposed universal access to pre-kindergarten last year during his campaign. But debate over a universal pre-kindergarten proposal on the ballot June 6 in California shows that widespread disagreement continues over whether the education of all 4-year-olds should be a public obligation.

Proposition 82, pushed by actor-director Rob Reiner, would require California to offer three hours of preschool a day to all 4-year-olds, with funding obtained from a tax increase of 1.7 percent on individual income of more than $400,000 and on joint-filer income greater than $800,000.

This NBER report is therefore timely:

Canada's Universal Childcare Hurt Children and Families

In Canada, the province of Quebec introduced universal subsidies to childcare over the period 1997-2000.... In Universal Childcare, Maternal Labor Supply, and Family Well-Being (NBER Working Paper No. 11832), authors Michael Baker, Jonathan Gruber, and Kevin Milligan measure the implications of universal childcare by studying the effects of the Quebec Family Policy....

The authors first find that there was an enormous rise in childcare use in response to these subsidies: childcare use rose by one-third over just a few years. About a third of this shift appears to arise from women who previously had informal arrangements moving into the formal (subsidized) sector, and there were also equally large shifts from family and friend-based child care to paid care. Correspondingly, there was a large rise in the labor supply of married women when this program was introduced.

Disturbingly, the authors report that children's outcomes have worsened since the program was introduced along a variety of behavioral and health dimensions. The NLSCY contains a host of measures of child well being developed by social scientists, ranging from aggression and hyperactivity, to motor-social skills, to illness. Along virtually every one of these dimensions, children in Quebec see their outcomes deteriorate relative to children in the rest of the nation over this time period. Their results imply that this policy resulted in a rise of anxiety of children exposed to this new program of between 60 percent and 150 percent, and a decline in motor/social skills of between 8 percent and 20 percent. These findings represent a sharp break from previous trends in Quebec and the rest of the nation, and there are no such effects found for older children who were not subject to this policy change.

The authors also find that families became more strained with the introduction of the program, as manifested in more hostile, less consistent parenting, worse adult mental health, and lower relationship satisfaction for mothers.

hold-up party in a former bank, rue volney, 05/31/06

Love Econ, Bad at Math

A student emails me seeking advice. To paraphrase a long letter, he asks:

I love economics and my economics courses, but I struggle with my math courses and am not doing particularly well in them. What graduate school and career path would be right for me?

I have met Harvard students with similar questions. This spring I talked with a Harvard senior who, because of a weak math background, was rejected by every econ PhD program to which he applied. At the same time, he had a strong academic record overall and was accepted by several of the very best law schools.

There are two possible paths for such a person.

1. Make extra effort to get a stronger foundation before applying to a PhD program in economics. One possibility is to spend a year or two at a master's program, such as the one at the LSE. Although one can go directly from an undergrad degree to a PhD program (such as Harvard's), some students get a master's degree first, and that background gives them a leg up when they start a PhD.

2. Stay involved in economics but through a different channel than graduate school in economics. Many people involved in economic policy are trained as lawyers rather than economists. Two examples that come to mind are Gene Sperling and Brink Lindsey. I don't know anything about their math backgrounds, but I imagine that a person could follow their admirable career paths without having studied all the math you need for an econ PhD. There are many areas of law that are filled with economic analysis, such as tax and antitrust. A person who loves economics can find many courses that would interest him in law school. (The same could be said about schools of business and public policy).

To decide which of these two paths is right for you, you have to look hard at your own tastes and aptitudes to figure out your comparative advantage.

I spent 1 1/2 years in the early 1980s as a student at Harvard Law School, and I think I could have forged a happy career with a law degree instead of a PhD. In the end, I decided that my comparative advantage was in economics rather than law, so I suspended my law studies. But I can always go back and finish the law degree if this economics thing doesn't work out for me.

Prescott on the Estate Tax

In today's Wall Street Journal, economist Ed Prescott defends the repeal of the estate tax:

Since an estate tax is really just another name for a tax on capital income, then there is certainly no justification for such a tax. I, and others, have written before in these pages about the inefficiency of capital income taxes, and there's no need to revive those arguments here, except to say that we can only grip the neck of our vibrant economic goose so tightly before it eventually dies and quits laying those golden eggs....

Yet what about all the money that is left in bequests to fund university alumni buildings, art museum wings and public broadcasting? If we abolish the death tax, won't charitable organizations be hurt? I admit to a soft spot for this argument, but the fact is that people will still give to charity. In 2003, charitable contributions reported on 1040 income tax forms totaled $145 billion, which is roughly 10 times the $14.6 billion charitable contributions reported on the estate tax forms.

I am puzzled by those who say that the repeal of the estate tax will hurt charitable giving. Repeal has two opposing effects: a substitution effect (it raises the relative price of giving to your favorite charity rather than to your heirs) and an income effect (you have more to give). Critics of repeal seem to assume that the substitution effect dominates the income effect. I am not convinced that is right.

Imagine a wealthy Harvard alum. His will says, "Give each of my 10 heirs $10 million after taxes, then the rest to Harvard." If he faces an estate tax rate of 50 percent, then funding the heirs will cost an extra $100 million, which will all come at Harvard's expense. Isn't something along these lines plausible?

If commentators know of relevant evidence about the size of income and substitution effects regarding charitable giving at death, please share it with us.

Update: I am alerted to a relevant CBO study of the topic. The CBO's bottom line:

The analysis finds that permanently raising the amount of wealth exempt from the estate tax to either $2 million or $3.5 million would reduce charitable giving by less than 3 percent, as increased giving by the wealthiest donors would partly offset lower giving by donors with wealth below those cutoffs. However, permanently repealing the estate tax would cause a larger decline in charitable giving�of 6 percent to 12 percent. For the federal government, reduced giving would directly raise income tax revenues by lowering the amounts claimed as itemized deductions for charitable contributions. That revenue gain would partially offset the loss in revenue caused by repealing the estate tax.

mocky's concert, sc�ne bastille, 05/31/06