Standardized Tests > Grades

Over at Inactivist, DA Ridgely has a pretty interesting post about grades and standardized testing. As a member of the (Smoke Free) Class of 2000 in Oregon I was one of the lucky sots used as an experimental rodentia for the CIM/CAM [warning: PDF]. The CIM/CAM was, and as far as I know still is, Oregon’s way of trying to measure student performance without having to give those peskily objective standardized exams.

Ridgely’s point is that the reason students do poorly on standardized tests in comparison to their class grades is that classes are graded incredibly easily. For the most part, I think he’s probably right. My elementary school didn’t even have letter grades until you hit sixth grade, and I went to a public school in the Portland, OR suburbs. Also, like Ridgely, I have always done extremely well on standardized tests: never below the 92nd percentile on anything, and the only time I was below the 95th was on a math test in third grade. I scored 1360 on the SAT without prepping, I got a four on the AP English exam without ever taking an advanced English course in high school, again without study. On the other hand, I was always a middling student. My GPA in high school was just a hair below 3.0 because, frankly, I didn’t care. School, especially once you realize that the rules are arbitrary and capriciously enforced, is often useless and usually tedious. I didn’t learn anything in my US History course my Junior year that I hadn’t learned during the US History course I took in 8th grade, I learned little in my Sophomore Government course that I hadn’t learned in Government in 7th. Primary and secondary education is more about keeping kids in line, making them behave, and getting them to conform to the whim of authority than it is about teaching them anything.

Is it any wonder that teachers give up and start handing out grades kids don’t deserve? I’m sure most teachers, especially in the public schools, feel brow-beaten and unappreciated. There’s no meritocracy, you can’t teach the way you want to, and to top it all off if you give little Biff a bad grade his lawyer mommy will come down and yell at you on your time off. So you give the kid a B and you shuffle him along.

This system serves no one: kids are bored and uneducated, parents are frustrated, teachers are at their wit’s end. Short of a massive structural change in the way we think about education (hint, I think cutting administration, reducing centralized planning and giving teachers more autonomy can’t hurt) we’ll continue to face exactly the same issues. Granted, in Libertopia there wouldn’t be compulsory education or public schools…but given that there will be, because they are extremely cherished if extremely faulty, there simply must be a better way. In my opinion, the best solution is to let failure happen. When there are consequences for failure, things start to shape up pretty quick.

Maybe We’re Not So Very Crazy

I was talking to my girlfriend last night, in my usual service as assistant for the “International Debate” class she’s currently taking and the subject of kleptocracy came up, I believe in the context of a larger discussion about the IMF and World Bank. I don’t rightly recall, actually, but it was something like that.

In any case, I managed to sort of stumble upon this working paper by Oguzhan C. Dincer, Christopher J. Ellis and Glen R. Waddell. Full disclosure, I checked the UO Economics website because Professor Ellis once mentioned to me he was doing some work on kleptocracy and I started wondering what ever became of it. The working paper linked above is on the negative relationship between corruption and decentralization of the power to tax and spend. That is, as power is decentralized there appears to be less corruption. From the introduction:

Recent works by several contributors point to a significant negative relationship between the degree to which the powers to tax and spend are decentralized in an economy, and the overall level of governmental corruption (e.g., Treisman, 2000; de Mello, 2000; de Mello and M. Barenstein, 2001; Fisman and Gatti, 2002a; Arikan, 2004).1 On the surface this is quite surprising, as it might be anticipated that local politicians or bureaucrats would possess detailed knowledge of any opportunities for corruption that might arise in their jurisdictions. They might thus be expected to extract any corruption rents available more efficiently than less well informed national counterparts.

In what follows, we both propose a theoretical explanation for, and find further evidence in support of, a negative correlation between empirical measures of corruption and decentralization. We argue that because there are more independent taxation and expenditure decisions made in a decentralized economy, there are more opportunities for local populations to make cross-jurisdictional comparisons of politician or bureaucrat performance. The poor performance of a government in one jurisdiction might be attributed to a number of factors including corruption. An increase in the number of comparative observations made by the populations of jurisdictions has two effects relevant to the relationship between corruption and decentralization. First, as the number of comparative observations made by a jurisdiction’s population increases the inferences they make about the causes of a particular observed outcome become increasingly precise. Second, as the number of observations increase the likelihood that particular inferences will be arrived at also change. As we shall subsequently see, this latter effect proves to be crucial in generating a negative theoretical relationship between corruption and decentralization.

The rest of the paper goes on to outline the theoretical and empirical case for lower levels of corruption as power becomes more decentralized. This is relevant to libertarians in that it lends verifiable data to our claim that a minimal state with many decentralized branches of power will likely result in the best outcomes. Personally, I also don’t find the conclusion particularly shocking.

I’m sure this has been address elsewhere, but I don’t exactly have the time this evening to educate myself on the last 10 years of kleptocracy research, but I would suspect that centralized authorities would be a bit easier to bribe because you can get more for your marginal corruption dollar. If you have a fixed amount to spend on bribe money, and a whole host of petty bureaucrats to bribe you’ll, obviously, be able to spend less per bureaucrat and thusly have a harder time achieving your ends than you would if you could spend the entire graft budget on the one fellow in charge.

Hey, Teacher Administrator, Leave Them Undergrads Alone

I’ve been thinking a lot the past few weeks about College. Not so much the drunken memories of bad ideas from yesteryear, but rather about the sort of violence problems inherent in the system. There’s a lot sort of wrong with higher education in this country, but having a rather small sample I really can’t claim my observations are perticularly scientific. However, I do think that many of the problems could be solved with a fairly simple solution. I’ll use, oh, the not-at-all-randomly selected University of Oregon.

Now, the University of Oregon is on quarters and required 180 hours for my degree. Of those 62 hours had to be upper-division, some proportion had to be completed at the University of Oregon, 168 had to be taken for a grade (or transfer credit), 45 had to be taken at the University of Oregon for a grade, etc. The University also has, of course, general education requirements. 8 “multicultural” hours, 8 of written English, 16 of “Arts and Letters”, 16 “Social Science”, 16 “Science”, 12 hours of Mathematics for the Bachelor of Science, plus my degree requirements. I, and every other sot at the school, spent basically the first two years of his or her college experience retaking high school. Don’t believe me? The first day in WR122 (the second of two required writing courses, fortunately I’d placed out of the first) consisted of instructions in how to construct a proper thesis statement. Wait, no, excuse me, enthymeme. Yes, that’s right, they tried to teach us to construct logically unsound arguments around which to base papers. Frankly, I’d rather put all of my premises out in the open, thank-you-very-much. In any case, these are the sorts of things one should’ve learned in high school. If one didn’t, that really isn’t anyone else’s problem, and paying customers students should not be made to suffer through that sort of tripe. The same can be said for introductory World History courses, or introductory Science classes of any sort. By the time you’ve had 12 years of schooling, well, you certainly shouldn’t be unsure as to whether or not the Earth goes ’round the Sun. If you are, well, that’s your problem.

And here we have arrived at what I see as the root of the entire college problem: in order to obtain a degree, you are required to sit through what amount to another two years of high school. The material isn’t engaging, and it makes damn sure students are burned out by the time they can take the classes they’re actually interested in. So get rid of it. Instead of requiring all of that crap university wide, require 180 hours, only 30 of which can be taken pass/fail. Allow the individual departments to make whatever requirements they want: so the Journalism school might still require a bunch of the same stuff it requires, but the Mathematics department might keep the same degree requirements that they have now. Rather than “making students well-rounded” by forcing them to sample any number of the bad appetizers the university system has to offer, they would be free to take classes of their own interest and still get a degree in four years.

Paternalism: Yup, We’ve Got That

Mark Thoma suggests that setting a “really bad default” would likely make people start paying much more attention to their retirement planning in the form of employer-sponsored 401(k) plans. He links to this NYT piece that suggests perhaps a default contribution rate of 15% pre-tax salary would be enough to get people involved.

Now, I don’t really have a fundamental problem with requiring that all 401(k) plans be opt-out rather than opt-in. Yes, I worry that eliminating the opt-in option might make it more appealing for some employers to scrap the plan entirely or reduce their matching rates than to have an opt-out plan: in which cases either nobody wins or people win less than they’d have liked, respectively. I also have some concerns about spiking the number of participants fiduciaries must pay attention to overnight, but that’s not really a primary concern.

However, even if Thoma and the NYT are right that persuing this policy would increase the savings rate and make people pay more attention to their retirement planning, is it something we should do? The answer is no.

It is not the government’s job to make sure people save for their retirement, it is not the duty of our duly elected officials to baby us or nag us into doing what is right. The objection raised is that then people will end up on the dole, and that will cost the government more than this policy would. While this statement is trivially true, it doesn’t address the problem: the problem is not that people may end up on the dole, the problem is that the dole exists in the first place. Yes, that’s hyperbolic, but the point is simple; if you make getting handouts easier than doing for oneself, a lot of people are going to take handouts.

What’s more, once you authorize government to dictate to you how much you should be saving for your retirement, over and above the theivery done on behalf of the odious Medicare and Social Security ponzi schemes, you empower it to tell you any number of other things. By giving government that much power over your household budgeting decisions by default, you might as well let them give you a grocery list to shop from every week. Sure, you’d be free to change it, but Uncle Sam would make the first one…just to ensure that you’re getting a balanced diet. Perhaps our benevolent Senators and Congresscritters should set some budgeting guidelines for car payments as a percentage of take-home pay, or how much you spend on your house payments as a general guideline…it doesn’t end once you’ve started.

There’s no fundamental difference between some jackass Congressman telling me I don’t have my discount rate set correctly and that same jackass Congressman telling me I’m spending too much money on food. In fact, there is no difference at all. Savings is simply trading present consumption for future consumption plus real return, is there a compelling reason why some DC wanker knows more about the rate at which I’m willing to make this trade-off than I do? Lord no.

I’ll be the first to tell you that people generally don’t save enough for retirement, particularly the young. Starting early and maintaining the right portfolio balance at each phase of your life are the two most important tricks to having enough, and it’s very important to plan for that. There’s a great moral and economic case to be made for such things, and only a fool would say otherwise. However, it is my right as an individual to spend my earnings however I damn well please. If I want to consume at a rate of 90 cents per dollar, well, that’s my right. Hell, if I want to spend every last cent I earn on liquor and guns while using my credit cards to prop-up the lean times that’s also my right.

Part of freedom is the freedom to screw up in a spectacular way. Saying that the government is there; that the government “has got to move” when somebody hurts; that good ol’ Uncle Sam will be there during hard-times for you infantalizes the whole citizenry. Treating people like spoiled, incompetent children is no way to make them behave like adults. Besides, government isn’t my mother, it can’t make me behave like an adult if I don’t want to. Neener Neener.

Arthur Andersen Ain’t Got Nothing On These Guys

More on loan document typos soon, I promise or something. But, today Don Luskin points out a major flaw in the NYT’s editorial on Bush’s visit to the “Social Security Trust Fund”, you know, the one that’s just made up. Well, okay, it technically exists, but in order to think it’s worth anything you have to get into some really creative accounting. Now, I got through an entire undergraduate education and managed to avoid the B-school like the plague, but I can at least read a balance sheet. Luskin’s main point is this:

The point that all this hand wringing is designed to distract you from is that it is both semantically and financially meaningless for anyone to owe a debt to himself. The US government can no more fund Social Security obligations by issuing Treasury bonds to itself than the New York Times Company can fund its pension obligations by issuing corporate bonds to itself. Debt that one issues to one’s self cannot represent savings or wealth, because the same entity that owns the debt as an asset owes the debt as a liability.

And I thought I’d further demonstrate this with a fictional balance sheet I made in Excel. Let’s suppose I have a business called Money Corp LTD, and that I start off with $1,000 (in liquid cash, Money Corp has no capital investments and extremely low overhead, and this is just an example). My initial balance sheet looks like this:

So, I the clever Corporate Tyrant think to myself, why don’t I buy some Money Corp bonds with this? We’ve got an A rating, it’s a safe investment, we’ve never defaulted! All right, I think, let’s do it! The new Money Corp balance sheet looks like so:

Gee, I think to myself, what a shrewd investor I am, I’m running a surplus! Thusly, I get together with the Money Corp Board and we decide to use that $1,000 of bond revenue to pay each of the nine directors and myself a bonus of $100. Total bonus: $1,000. New balance sheet:

But, oh no! Our shareholders have gotten wind of this, and they’re demanding a penny a share on all 100,000 shares (they’re also remembering that’s what I promised them)! What am I going to do? I have no assets left! My balance sheet is scary:

But wait! I really forgot to count holding those bonds as an asset, because I owe myself $1,000, it says so right on the bonds! But…I issued those, so I’m also in debt to myself $1,000. There’s nowhere to get the money! Our shareholders are S.O.L! And I might be on my way to Federal-pound-me-in-the-ass-prison…hold on, there’s a secondary market in bonds. I guess I can sell them at face value and reap the revenues to pay the stockholders so I don’t go to jail. The balance sheet looks like so:

But, hold on, something’s rotten in the state of Money Corp. I don’t actually have those bonds any more, because I sold them to someone who isn’t me, so they have to come off the Assets side, and my balance sheet actually looks like this:

Which means, of course, that when those bonds come due Money Corp is going to have to come up with $1,000 out of future earnings to pay them all back.

This is exactly what’s going on with Social Security. The Social Security system (a branch of govenment) has traded its surplus cash for bonds, government bonds. That money went into the General Fund and was spent as soon as it came in. The issuer of those bonds is the Congress of the United States of America, another branch of government. In the future, SS expenditures will exceed its income (payroll taxes), meaning that Congress is going to have to start paying back those bonds using its income (income taxes). Meaning, of course, that we’ve already robbed the hell out of Peter and Paul is standing around the corner pretty upset about not having been paid yet.

By issuing bonds to itself and then spending the revenues of the bond sales, the government has put itself in a pretty precarious position. Even if the Treasury bonds that are in the Trust Fund were sold on the secondary market, and those cash revenues used to shore-up the present system or pay some of the conversion costs to a solvent system, there would still be billions trillions or hundreds-of-billions of dollars in outstanding government debt. So, the next time somebody tries to sell you on the validity of the Social Security Trust Fund, remind him/her that Bernard J. Ebbers is going to prison for a while for doing something, well, not too dissimilar.

UPDATE: Welcome Asymmetrical Information readers, thanks to Mr. Dreck for the link! Click around, if you feel like it.