Social hell

Quote from The Black Swan by Nicholas Nassim Taleb. P.87

“Many people labour in life under the impression that they are doing something right, yet they may not show solid results for a long time. They need a capacity for continuously adjourned gratification to survive a steady diet of peer cruelty without becoming demoralized. They look like idiots to their cousins, they look like idiots to their peers, they need courage to continue. No confirmation comes to them, no validation, no fawning students, no Nobel, no Schnobel. “How was your year?” brings them a small but containable spasm of pain deep inside, since almost all of their years will seem wasted to someone looking at their life from the outside. Then bang, the lumpy event comes that brings the grand vindication.
Or it may never come.
Believe me, it is tough to deal with the social consequences of the appearance of continuous failure. We are social animals; hell is other people.”

rate of returns to education

The draft lottery (p.251 borjas)

An experiment for returns to education was performed using Vietnam draftees.[1] A cohort of draftees was randomly chosen by their year of birth, and each draftee was randomly assigned a lottery number between 1 and 365. The soldiers with high numbers were not drafted, while the soldiers with low numbers were drafted unless they went to college for three more years of schooling. There is no reason to expect that the differences in ability between soldiers in the group were significant so the experiment controls for ability bias. A soldier born on January 8^th 1951 has on average the same ability as a soldier born on January 10^th 1951. So to compare the returns to education between the soldiers with the low lottery numbers with extra schooling and the soldiers with high lottery numbers without extra schooling gives the true rate of returns to education. The results were that the returns are on the order of 7%.

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[1] Angrist, j. and Krueger, a. “estimating the payoff to schooling using the vietnam-era draft lottery” national bureau of economic research working paper no. 4067, may 1992

school quality

Sebastian is annoyed that after years of research economists still can't decide whether more spending on schools actually improves the quality of schools.

According to David Card and Alan Krueger:
"Thirty years after the Coleman report, it is unfortunate and frustrating that
more is not known about schooling. While most of the literature on test scores
points to little, if any, effect of school resources, some observational studies and
one actual experiment have found a connection. Decisions about educational resources
and reform have to be made in an environment of much uncertainty."

The full paper that this conclusion was from can be found here http://links.jstor.org/sici?sici=0895-3309%28199623%2910%3A4%3C31%3ASRASOA%3E2.0.CO%3B2-L