TCS Daily

A 2020 Vision for Education

By Arnold Kling - June 15, 2004 12:00 AM

"For a basket of economic education goods, will prices be higher or lower than the rate of inflation over the next 6 years and through 2010?"

-- Randy Piper

Questions like these from a loyal reader led me to try to think through what will happen in the education sector in the next decade or two. About ten years ago, I heard Nicholas Negroponte give a talk in which he said that forecasting is a simple matter of extrapolating from obvious trends. That is the approach that I will use here. I merely assume that three existing trends will continue.

The first ongoing trend, one that affects the demand for education, is rapid technological change. As the pace of change continues, or even accelerates, it causes all human capital to depreciate more rapidly. In plain English, new stuff comes along that you need to know, and stuff that you used to know becomes irrelevant.

The human capital that depreciates most quickly is specific human capital, which is knowledge that is keyed to an individual firm, occupation, or industry. In contrast, generic human capital, such as communication skills or mathematical aptitude, depreciates less rapidly. (To keep the distinction between specific and generic human capital straight, my labor economics professor Michael Piore used to quip that specific human capital needs knowing where the bathroom is located while generic human capital means knowing how to read the sign on the door.) From 1960 through 1990, a lot of blue-collar specific human capital depreciated rapidly. Workers trained as tool-and-die makers, lathe operators, or other factory jobs had to learn new skills and find new occupations. What is going on today is a similar high rate of depreciation in white-collar specific human capital. You no longer can get lifetime employment out of a single set of white-collar skills, such as secretarial typing or mortgage underwriting.

The second ongoing trend, one that affects the supply of education, is progress in cognitive science. Researchers are beginning to obtain knowledge about how the brain functions, how people acquire various mental skills, and how to diagnose and treat more learning disabilities. I follow these developments by reading the blogs of Randall Parker and Zack Lynch.

Finally, a trend that affects the future market structure of education is discomfort with change. The traditional suppliers of education services -- elementary schools, secondary schools, and colleges -- tend to be resistant to change, as one would expect. Moreover, parents tend to be very conservative about such educational institutions, preferring to see the schools to which they send their children continue to resemble the schools that the parents themselves attended.


Given these trends, the predictions that follow seem fairly obvious.

  • The share of education in GDP will increase. Capital that depreciates rapidly needs to be replenished more extensively. In plain English, people will require more education, particularly when they are in mid-career and find that their existing skills require updating.

  • An important skill will be knowing how to learn. Everyone will have to be capable of independent learning. Elementary and secondary education will be expected to develop this capacity for independent learning. However, it could turn out that many of the barriers to becoming an independent learner are emotional or grounded in brain function, in which case treatment will be directed from outside of the school.

  • The educational focus will gradually shift from curriculum and compensation to diagnosis and development. The typical thinking has been that educational shortcomings are collective, so that the road to improvement is curriculum reform. In particular, slow learning is viewed as caused by group disadvantages, which are thought to require some form of compensation, such as bilingual education for Hispanics, Head Start for poor children, or smaller class sizes for schools with low test scores.

By diagnosis and development, I mean focusing more on individual needs, as opposed to group needs, and using specific therapies to overcome weaknesses and enable students to develop. Each student's "cognitive profile" will be analyzed, so that education strategies and treatments for the student can be tailored to that profile.

  • Insights from cognitive science will diffuse throughout society. A good analogy would be with sports medicine. Fifty years ago, professional sports teams employed trainers who applied techniques derived from a combination of experience and superstition to try to keep athletes healthy. Today, the process of conditioning athletes is grounded much more in science. That knowledge has filtered down to the general public through doctors, health club staff, personal trainers, magazines, and books.

Like team trainers fifty years ago, today's educators use methods that are based on a combination of experience and superstition. Over the next several years, the leading edge of the field of education (probably the military and/or corporate training) will start to apply cognitive science. We will see more use of nutrition and medications to affect brain chemistry, and more educational exercises designed to specifically affect fundamental brain development. Gradually, over the following decades, the general public will become familiar with principles and techniques grounded in brain chemistry, cognitive psychology, and related fields.

  • Parent-driven schooling will increase. As parents start to acquire knowledge derived from cognitive science, they will become more confident about giving input and making decisions concerning education strategies for their children. Parents will make more use of personal educational consultants and other non-school-based resources. Home schooling and traditional schooling will become less of a dichotomy and more of a continuum.

  • Most of the increase in education spending per person will go to suppliers other than traditional schools and colleges. That is, traditional schools and colleges will hang onto their current market, but they will not expand to meet new demands for education services. Both internal and external pressures will make them slow to adopt new techniques based on cognitive science, so that competing providers will step in to fill the gap. Radical innovation in general tends to come from the fringe, as William Baumol and others have argued, and this is likely to be the case with education.

Education Costs vs. Inflation

Returning to Randy Piper's question, will the cost of K-12 and college education continue to rise faster than the average rate of inflation? Well, by the definition of average inflation, some products and services must have their prices rise more quickly and some must rise more slowly. I think it still makes sense for the traditional educational services to be on the high side of average when it comes to price increases.

There is a strong emotional attachment to public education. That, along with the political power of teachers' unions at both the local and national level, implies continued increases in spending on public schools.

Similarly, at traditional colleges and universities there is little incentive to hold down costs. I have argued that affluent parents are willing to pay high tuitions as part of a "segregation equilibrium" in which they want their children to attend schools with other children from affluent families. College administrators themselves would rather pour more revenue into facilities and salaries than try to hold down expenses and tuition.

By the year 2020, however, I expect that the educational value of traditional institutions will have declined in relative terms. Instead, access to desirable occupations will depend more on the individualized education services that a person has received than on what they learn in public school or in college.

Overall, I believe that the best entrepreneurial opportunities in education will involve the application of cognitive science to customized, individual learning enhancement. Those will be the approaches with the potential to make learning more cost-effective.


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