Comment by nostrademons | Hacker News Reader

Comment by nostrademons | Hacker News Reader

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There're costs to that economic output that are not reflected in its dollar value.

For example, what's the value of having a parent at home full-time? What's the value of having both parents home for dinner? A bunch of studies have shown that one of the best predictors for having successful, well-adapted children is how much time the family spends together. But how do you quantify that? You won't know what the exact payoff is until 10-15 years later, when the kids are well into their own careers and having their own children. And it varies a lot from kid to kid - someone who's performing well academically with a supportive peer group needs a lot less parental involvement than a loner with no friends who's threatening to blow up the school.

Or another example: when I went to college, I believe the fin-aid formula was that the college would take 100% of my assets, based on my age and income. That meant my gap year was revenue neutral - it didn't matter how much I worked or what I worked on, I wouldn't be able to keep any of it. But that gave me the freedom to observe and to try things out, without the stress of trying to make a lot of money, and in the process I found my eventual career.

You don't want to run an economy like this - there needs to be some accountability so that people work on things that are actually useful. But a high school grad who's time-limited to one year of work isn't going to accomplish anything actually useful anyway - instead, that gap year is an investment in perspective, a way to understand more of the world before you commit to four years in college.

The same thing often comes up in research - a short-sighted focus on increased economic output leads you to miss opportunities that have no obvious dollar value attached, but can be big economy-changers in the long run. How long did it take GMail to become profitable, and would it have existed had Google had the same quarterly bottom-line orientation that most public companies do? How about Google itself? If Larry and Sergey had done the economically rational thing in 1995, would we still be searching on AltaVista? Is Twitter making money yet?

"There're costs to that economic output that are not reflected in its dollar value."

I agree, but I'd rather put that decision in the hands of each individual and not a bunch of central planning bureaucrats. You're assuming that people aren't capable of weighing all the costs (dollars or otherwise).

Well, the tax/finaid structures here also place the decision in the hands of each individual, they just tilt the incentives.

I'm very much in favor of finaid working the way it does, because it also opens up the possibility of bright children from backgrounds who simply would not be able to afford it going to elite colleges. That's supposed to be the point of education - level the playing field, so that even if you're born to garment-worker immigrants, you can make it big in your own lifetime. If it means that middle class families have some skewed incentives, I don't care.

I'm less sure about the tax issues. I'd like to see the tax code simplified in general, if only because tax preparation is so inefficient now. And I think disincentives in tax rates may cause more harm than the revenue collected from them does good.

Well, the tax/finaid structures here also place the decision in the hands of each individual, they just tilt the incentives.

So does a mugger's threat, somewhat more starkly.

Here's an interesting video about the history of financial aid for education:

http://schiffforsenate.com/?q=media/how-government-programs-...

Synopsis:

In 1918, a factory worker at Ford Motor Company earned $5 per day and kept all of it. In 32 days he would earn $160, enough to cover the annual tuition at Yale University.

Real (inflation-adjusted) wages have declined or stayed static since the 1970s. Even if college tuition only increased at the rate of inflation, it would still be harder to afford today than it was in the past.

Also, Ford workers at that time were making above-average salaries. They weren't the lower-middle-class to middle-class auto workers of today, they were solidly upper-middle-class. And 32 days is like 12% of his salary, so it wasn't exactly cheap for him (though far better than the 30-40% we see now).

Finally, it's disingenuous to compare 1918 colleges to 2008 colleges. Two major events really shook up the post-high-school landscape in those 90 years: the GI Bill and Vietnam. The GI Bill sent like 5 million people to college in the 40s-50s who otherwise couldn't have afforded it. Then Vietnam made college compulsory for middle-class or upper-middle-class men looking to avoid military service. Throw in desegregation, affirmative action, and co-education, and it's pretty clear that college went from being the domain of the brilliant and affluent to being open to the majority of Americans who finish high school. This total structural shift and basic re-definition of college makes pre-70s tuitions irrelevant to today's system.

If you want, you can also toss in the degree to which the job market has changed to requiring skilled workers with some form of post-secondary education. While some of this is likely a result of the education levels of the labor-supply, at least part of it is due to our changing industrial and commercial landscape.

You're assuming that people aren't capable of weighing all the costs (dollars or otherwise).

Which is a reasonable assumption. We wouldn't need laws if people could rationally weigh up the costs and benefits of their actions.

No bureaucrats are making any decisions in either of your hypothetical scenarios. In one case, there's an unchanging legislative environment incentivizing more work, while in the other case the legislative environment is incentivizing other potentially valuable things. No decisions made.

As long as the tax code isn't too complicated and it doesn't change constantly, then how is the government meddling? There are just free people making their own decisions; their decisions just have slightly altered outcomes depending on the environment they're made in.

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