Common Sense and the Marginal Student, Bryan Caplan

Common sense says that marginal consumer of a product - the individual who say "Eh, why not?" before he buys - benefits less from his purchase than the product's average consumer. This is clearly true for consumption decisions: The typical person at the opera clearly enjoys the present more than the reluctant newbie whose friends talk him into going.

This principle - the marginal person gains less than the average - is equally plausible for investment decisions. The distinctive college student will make a bigger return from his education than the kid who grudgingly enrolls to get his parents off his back. When I share this title with practicing labor economists, however, they're ready to scold me. Don't I recognize that instrumental variables methods indicate that the marginal student gains at least as much - if not more - than the fair student? My main technical objection is that labor economists inappropriately focus on completed education rather than attempted education. But that aside, I only consider common sense more true than instrumental variables. Fancy econometrics reduces my trust in my original position, but only slightly.Now just yesterday, I knowing that Heckman and co-authors make a new NBER working paper vindicating the usual sense view that marginal students gain a lower return. Their evidence against all the fancy econometrics is. even fancier econometrics:This paper estimates the marginal returns to college for individuals induced to enter in college by different marginal policy changes. The recent instrumental variables literature seeks to approximate this parameter, but in general it does so entirely under strong assumptions that are tried and found wanting. Our empirical analysis shows that returns are higher for individuals with values of unobservables that cause them more potential to see college.It would be tempting, but dishonest, to take that the latest research "proves me right." I was positive that school helped the marginal student less years earlier I heard about Heckman's results. I question that reading his search in depth will have me any more confident. Yes, I'm happy to see Heckman lending his Nobel status to the vulgar sense position. But in a complete world, the usual sense position wouldn't take his position to survive.P.S. Dan Klein and I are speaking in Madison, Wisconsin tonight (Monday 10/25). If you have the talk, please say hi.