Improving Education

I just read an interesting column by the Naked Economist about how to improve American education.

To demonstrate public education he compares company A with company B.

Company A hires the best people it can. Those who are hired are paid and promoted based on performance. This is not easy, as it's often hard to determine who is really doing a good job. The compensation and promotion process is prone to politics and personal preferences. Still, most people at Company A recognize that there is a connection between pay and productivity. The true superstars get recognized eventually. Those who come to work but never contribute are fired eventually. Everyone in between believes that there is at least a tenuous connection between how hard they work and how well they do at the firm. It's not a perfect meritocracy, but it's not the Soviet Union either.

Company B also seeks to hire the best people it can, with several caveats. First, all prospective employees must undertake two years of full-time specialized training, at their own expense, just to be considered for a job. Study after study has shown that this training has zero connection to subsequent performance at the firm, but Company B sticks to this screening mechanism anyway. Second, all employees eventually hired by Company B are paid based on their years of experience at the firm, which also been shown to have little or no connection with job performance. Finally, Company B promises that no one who has worked at the company for three years or more will ever be fired, even if their performance is mediocre or poor, year after year.

Obviously, company B is our public education system. He goes on to argue that this system discourages the best people from becoming teachers. I don't disagree. I believe our teachers are still paid poorly for all the work that goes into being a good teacher. I also know that there has been a lot of controversy over teacher-training programs. I don't know enough about teacher-training programs to really comment on this argument though.

What annoyed me most in this article was the economic premise he used to explain why the most talented were not becoming teachers:

Economists refer to this phenomenon as adverse selection. Individuals use private information (their expected productivity in this case) to sort themselves into a job with a compensation structure that suits them best.

In fact, I realized that this is what annoys me about economics in general (and this is coming from someone who has been fascinated with the field since our economy collapsed). It is overly rational, ignoring other more personal considerations. For example, using the adverse selection phenomenon described above, it would be expected that the smartest and most motivated people would all be in the fields that pay them the best. My personal experience tells me this is not true.

There are many incredibly intelligent and highly motivated people who work at my organization, a non-profit that does necessarily pay well. In fact, I would go as far as to argue that I rarely interact with colleagues who are not highly motivated and dedicated in their jobs. I am constantly surprised at how much we are able to get done with a small budget and a small amount of staff (compared to similar organizations).

Perhaps this just hits a little too close to home for me. I am not an unintelligent person and I know that I could make a lot more money in another field. However, I choose to work in a nonprofit because I believe in the field and in my organization's mission.

I guess one could argue that compensation is not always defined as money, but can also be defined as the value of your job. However, wouldn't this then go against the columnist's point?