William Baumol's new paper

The abstract:

In this paper we confirm the universality of steadily rising education expenditures among OECD nations, as predicted by “Baumol and Bowen’s cost disease,” and show that this trajectory of costs can be expected to continue for the foreseeable future. However, we find that while the level of education costs in America is significantly higher than that of all other OECD countries, education spending per student in the United States is increasing about as quickly as it is in many other countries — perhaps even less quickly. Although these cost increases undoubtedly will contribute to each nation’s fiscal problems, we conclude that effective education contributes to improvement of the economic performance of each country and can mitigate resulting financial pressures by spurring growth in overall purchasing power.

The title is "A Comparative Analysis of Education Costs and Outcomes: The United States vs. Other OECD Countries." The co-authors are Edward Wolff and Anne Noyes Saini.

Economics of education: college dropout

From a paper by Stinebrickner & Stinebrickner (Journal of Labor Economics, October 2012): 

Research examining the educational attainment of low-income students has often focused on financial factors such as credit constraints. We use unique longitudinal data to provide direct evidence about a prominent alternative explanation—that departures from school arise as students learn about their academic ability or grade performance. Examining college dropout, we find that this explanation plays a very prominent role; our simulations indicate that dropout between the first and second years would be reduced by 40% if no learning occurred about grade performance/academic ability. The article also contributes directly to the understanding of gender differences in educational attainment.

The authors explain:

As one example, our finding that students are, on average, substantially overoptimistic about grade performance at the time of entrance has a direct bearing on conclusions about the option value of schooling (Manski 1989; Altonji 1993; Cunha et al. 2005; Stange 2012).

They conclude:

Improvements in the quality of elementary and secondary schools would seemingly be helpful, but ensuring that precollege students have correct perceptions about the level of preparation necessary to succeed in college may be important for increasing student effort at earlier stages of schooling.

The most valuable skill anyone can learn in college . . .

. . . is how to learn efficiently -- how to figure out what you don’t know and build on what you do know to adapt to new situations and new problems . . . 

That is from an excellent piece by Virginia Postrel. She defends the liberal arts education and criticizes those who think that some majors must disappear because they are not marketable enough. 

College education should teach students how to learn on their own. Of course, most of the students disagree with this-and some professors do too. "To learn how to learn" one has to think, which is less and less common in a world in which one can only search Google and Wikipedia for answers. Probably some part of college education, instead of teaching "how to learn," should teach "how to search" . . . and then "how to connect" the dots. 

HT: Giancarlo Ibarguen.