Education and threshold effects

According to Malcolm Gladwell, to make it big you have to put in 10,000 hours. This is irrespective of any profession. It is a bold claim and has got me wondering. Can anyone put in 10,000 hours and expect to succeed. Or does it depend on certain other factors as well. And if so, what are these other factors?

First of all, it should be clear that Malcolm Gladwell seems to be reporting what he has observed from looking at the lives of the people who have succeeded. He is not counting the people who put in the 10,000 hours and did not make it. These are the invisible people who are difficult to find. Further, he is presumably talking about highly skilled people with sufficient human capital. After all, it would be very difficult to imagine that an unskilled worker can make it big by putting in 10,000 hours. There are hundreds of millions of unskilled workers across the globe that have put in 10,000 hours and yet remain poorly paid with no significant chance of progress in sight. If we were to believe the premise, the relevant question is what are the prerequisites that need to fulfilled before 10,000 hours start counting.

Lets think of this in the context of the debate on whether the quality of education counts. Does a good teacher have a positive impact on the students. The fadeout effect has always puzzled the economist. The impact of good quality education in kindergarten fades out as the student’s grade drop to average level. Chetty et. al. (2010) look at this using data of 12,000 children from a well know Tennessee education experiment Project STAR which randomly assigned students to kindergarten classes. Some classes did better than others but this effect disappeared by the high school. Surprisingly, the initial positive effect revisits in later years. Students that did better in kindergarten were more likely to go to college, less likely to become single parents, more likely to save for retirement and earn more.

The study does illuminate the contribution that educators and schooling environment makes. What it does not tell us how it affects it. Does it give each person a step up jump or does it increase the amount a person can extract from a given set of fortuitous circumstances. It also leaves me wondering if there are threshold effects. To put it more specifically, does the income increase with quality of education through at level effect or does it have an affect through various interaction terms. Further, are these effects continuously increasing in the quality of education or are there thresholds beyond which earning jumps suddenly.

These questions are very important from a policy perspective. If there are threshold effects, then providing education that does not reach the threshold is infructuous. This maybe a the story of a lot of education. It may also explain why systematically poorer people across the opt out of education. The returns to education do depend on other factors like health, public goods, infrastructure, economic activity and credit markets. These are factors that are all inter-connected and conspire together to provide an environment where the returns from education are high or low. This in turn determines whether markets can be used to deliver education or not. If returns are very high and people have an ability to pay, then the schooling can provided through the market. People would pay for the schooling in anticipation of high future earnings. People would be able to pay either if they (or their parents) have sufficient wealth or people can borrow against their future earnings. When the factors conspire to keep the earnings from education low, the state (government) needs to take the burden of education. Education here maybe helpful socially because of its external effects but individuals may not have the incentive to acquire education. This in turns leads to the vicious circle which keeps areas poor persistently as people do not have the incentive to acquire education and economic activity is limited due to low average level of education in the area.

One cannot think about education without thinking about it in terms of quantum as well as its interaction with other factors in the local economy. These links are complicated and it is not surprising that even though there is a large literature that shows education’s impact in micro studies, its impact in macro studies is yet to be discovered.

Raj Chetty, John Friedman, Nathaniel Hilger, Emmanuel Saez, Diane Schanzenbach and Danny Yagan (2010). How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project STAR.

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