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College Choice, Performance Pay And Life Expectancy

inthepapersEvery Monday, the National Bureau of Economic Research, a nonprofit organization made up of some of North America’s most respected economists, releases its latest batch of working papers. The papers aren’t peer-reviewed, so their conclusions are preliminary (and occasionally flat-out wrong), but they offer an early peek into some of the research that will shape economic thinking in the years ahead. Here are a few of this week’s most interesting papers.

Title: “College Access, Initial College Choice and Degree Completion”

Authors: Joshua Goodman, Michael Hurwitz, Jonathan Smith

What they found: Attending a four-year college instead of a two-year college increases students’ chances of finishing a bachelor’s degree by about 30 percentage points.

Why it matters: Measuring the impact of college on students’ lives is always difficult because people don’t choose a school at random: Are Harvard graduates successful because they went to Harvard, or because Harvard attracts smart, driven students to begin with? In this paper, the authors address that complication by focusing on Georgia, where students need a minimum SAT score to get into a four-year public college. That allows the authors to look at students just above and just below the cutoff point, who presumably have similar levels of academic ability. They find that students who are able to attend four-year colleges are significantly more likely to complete a bachelor’s degree than those who don’t qualify and end up attending two-year community colleges. The difference is particularly strong among low-income students.

Key quote: “We believe this is some of the first clear evidence that graduation rates improve when students ‘overmatch’ by choosing a college where the level of academic skill greatly exceeds his or her own. The marginal students generating our estimates are, by definition, among the lowest-skilled at their colleges and thus not obviously well-matched in a traditional sense to those institutions. They nonetheless appear to benefit greatly from having chosen the higher quality college option.”

Data they used: Student-level data for the Georgia high school graduating classes of 2004 to 2007 via the College Board and the National Student Clearinghouse.

Title: “Teachers’ Pay for Performance in the Long-Run: Effects on Students’ Educational and Labor Market Outcomes in Adulthood”

Author: Victor Lavy

What he found: Tying teacher compensation to test scores leads to higher college completion rates and better job-market outcomes for students.

Why it matters: So-called pay-for-performance schemes, in which teachers’ pay is linked to their students’ standardized-test scores, have become increasingly common in recent years. They are also controversial: Skeptics argue that the policies incentivize “teaching to the test,” leading to higher scores without improving longer-term outcomes. In this paper, the author follows up on an earlier study he conducted in Israel in the early 2000s. In that study, Israeli high school teachers could earn performance bonuses by boosting their students’ test scores; unsurprisingly, scores rose. In the new paper, the author looks at how those students are doing a decade later. He finds students in the pay-for-performance classes were 4.3 percentage points more likely to enroll in college and completed more years of college. They also experienced a 7 percent increase in earnings and were a third less likely to qualify for unemployment benefits.

Key quote: “This study is the first to follow students from high-school to adulthood to examine the impact of a teachers’ pay for performance scheme on long-run life outcomes. Such an analysis can address the critical question of whether an education policy intervention can achieve the ultimate goal of improving lifetime well-being. This research has also the advantage of focusing on a particular intervention that targets improvement in teaching quality and therefore can provide clear policy guidance, relative to more generally defined measures such as teachers’ value added measures.”

Data he used: Data from Israel’s National Insurance Institute regarding students from schools that participated in a 2001-2002 pay-for-performance experiment.

Title: “Testing for Changes in the SES-Mortality Gradient When the Distribution of Education Changes Too”

Authors: Thomas Goldring, Fabian Lange, Seth Richards-Shubik

What they found: The apparent decline in life expectancy for less-educated American men is largely explained by the changing distribution of education, not by an actual increase in mortality for particular groups of people.

Why it matters: Wealthier people tend to live longer than poorer people, and the gap appears to be growing: By some measures, poorer Americans’ life expectancy is actually falling. But according to the authors of this paper, that trend is partly due to a measurement issue. Many analyses of the life-expectancy gap are based not on income but on socioeconomic status as measured by education. But educational trends are changing over time. In 1984, more than 25 percent of women ages 25 to 84 had not earned a high school diploma; by 2006, that figure had fallen to 14 percent. As a result, the socioeconomic status implied by a high school diploma has changed: Someone without a diploma today is likely much more disadvantaged than someone in the same situation 30 years ago. The authors find that for women, the life-expectancy gap has increased even after accounting for shifting educational trends. But for men, educational patterns account for much or even all of the increase in inequality.

Key quote: “Substantively, we believe that this paper should help focus future research effort toward the question of why women at the bottom of the education distribution have failed to benefit from the decrease in mortality that took place between 1984 and 2006 among more educated women, and among the male population irrespective of education. In addition our findings suggest that inequality in mortality has not increased entirely in tandem with inequality in income. At least among males, the evidence points to a steady decline in mortality rates across the entire [socioeconomic status] distribution.”

Data they used: The National Longitudinal Mortality Survey and the National Health Interview Survey linked to the National Death Index.

Ben Casselman was a senior editor and the chief economics writer for FiveThirtyEight.