Tuesday, October 15, 2013

Econtalk: Tyler Cowen discusses his new book 'Average is Over'

A recent episode of Econtalk spoke with Tyler Cowen about his new book 'Average is Over' which discusses income inequality and the future economy. A general theme of the discussion is that many Western incomes will increasingly move towards bi-modal income distribution patterns as technological change disproportionately benefits certain segments of society and disadvantage others who depend on, for example, service industry jobs that will be automated away.

One part of their discussion I'd like to highlight was Tyler's thoughts on the increasing returns of conscientiousness (see below) for the future as more opportunities for self-improvement become available for very little cost. Of the Big Five personality measures, a considerable amount of research in psychology has settled on conscientiousness as the best predictor of success in education and life. This trait may end up being an important driver for determining which end of a hypothetical bi-modal distribution a person falls into.

"Russ: You also have a lot to say about conscientiousness and advantages that women might have over men. Explain. 

Tyler: Well, one thing we are going to get very good at in the future--you see it now--is just measuring quality.... I think, within 5 years the world's best education will be available online and it will be free. Arguably that's already the case. But the question is: Who is there to learn from this? It's the people who are disciplined and conscientious, which is still distinct from just raw intelligence. Now, if you ask the question, if you compare men to women on average, which group is less conscientious, I think you have to hand that one to the men. At least the lower tail of the distribution. So I think we already see in higher education and many other areas women doing better. And not just better because there is less prejudice. They are just outright doing better and out-competing the men. And I think that trend will be magnified by this increase value for conscientiousness. 

Russ: Explain again why conscientiousness is going to be more important then than it is now?

Tyler: There will be many more free resources; and there's already a lot. So the person who is just disciplined enough to sit down and, say, listen to EconTalk podcasts or read blogs or go through Kahn Academy or whatever it is they ought to be doing, that will be there for them free. So, what you'd call the 'shadow value' of conscientiousness in economic terms will be much, much higher. And you see that--students in India, they take Coursera classes and they are brilliant; but they are also really determined to work hard. And they are outperforming in general a lot of these top Stanford students. And that's being measured and picked up. And those people I think will do very well in this new world, and that's again a case of conscientiousness paying off.

Russ: I guess it's not just the advantage of being disciplined to sit in front of the computer on your own time, but it's also the fact that possibly it will be harder to get somebody to be drilling you and pushing you face to face.

Tyler: That's right, especially for people with lower incomes. But the free things will be there and the people who are maybe brilliant in some strange way but need to be in the middle of a lot motivation and pushing and peer effects, those people may be worse off."

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