🔢 Key Takeaways
- Investing in education can lead to higher lifetime earnings and financial growth. Graduates earn an average of 30% more than high school graduates, debunking the myth that education is a disadvantage in the modern economy.
- Education is valuable in securing higher income opportunities, but correlation does not always equal causation. Studies show that those with higher education levels tend to have higher incomes, and accidental experiments such as the Vietnam draft lottery have provided evidence for causality.
- The Vietnam War draft unintentionally increased college attendance and subsequent earnings, but attending college does not guarantee a better life. Healthcare reform should break the link between healthcare and employment for significant improvement, but the archaic element remains.
- Linking healthcare and employment causes inefficiency and job lock, while employers are not equipped to handle healthcare provisions. Additionally, the disparity in healthcare costs exists due to people not paying for their services. These concerns need to be addressed in the current system.
- Healthcare is a valuable commodity, and people must make decisions based on trade-offs between health, life, and money. Incentives matter, and drug dealers create safe environments to maintain their business.
- While reducing drug sales, cracking down on drug dealers can lead to increased crime and violence, as displaced dealers fight to protect their territory, highlighting the need to consider potential consequences before taking action.
📝 Podcast Notes
The Increasing Value of Education in Today's Economy
Education remains a significant factor in employment as every extra year of education can translate into an 8% increase in earnings over a lifetime. Returns to education have only increased with time with graduates earning an average of 30% more than high school graduates. This statement by Steven D. Levitt refutes the myth of education being a disadvantage in the modern economy. The value of education has been established and is backed by research and numbers. It is important to continue investing in education as it remains a valuable asset for personal and financial growth.
The Importance of Education in Today's Economy
The returns to education are higher than ever before due to changes in the economy. In the past, low education could still lead to a good manufacturing job, but with overseas competition, manufacturing jobs are scarce. The need for education has now shifted to other industries, including driving a taxi. Economic studies have found a direct correlation between education and future income, but it’s important to distinguish correlation from causality. Accidental experiments such as the Vietnam draft lottery have provided clues to causality by analyzing the educational paths of those with different draft numbers. These studies showed that people who received more education had significantly higher incomes than those who did not.
The Unintended Consequences of the Vietnam War Draft and Healthcare Reform
The Vietnam War draft had an unintended consequence of increasing college attendance and subsequently increasing earnings by about 30% for those who attended. However, this does not necessarily mean that those individuals had a better life and it is unclear if they would have been happier not attending college. In terms of healthcare reform, economists agree that breaking the link between healthcare and employment is necessary for significant improvement, yet the healthcare reform passed in 2010 did not address this issue. This is an archaic element of the healthcare system with no good economic justification.
Reexamining the Link Between Healthcare and Employment.
The link between healthcare and employment is not fundamentally necessary and leads to inefficiency, job lock, and dual systems. Employers are not necessarily equipped to be in charge of healthcare provision. Furthermore, people are not paying for the services they receive in healthcare, leading to significant cost discrepancies. The healthcare reform bill did not address either of these concerns, leaving major issues unresolved in the current system.
Healthcare as a Scarce Resource and Tough Choices
Healthcare is a good just like any other commodity, and people must make tough choices when it comes to accessing it. With healthcare accounting for 15-20% of GDP, we must treat it as a scarce resource, and people must be charged to avoid inefficient consumption of it. In a world where healthcare costs are increasing, trade-offs between health, life, and money will become more common, and people will be forced to make difficult choices imbued with a moral element. On the other hand, drug dealers have incentives to keep areas where they sell drugs safe because no one will want to buy from a place with rampant crime.
The Consequences of Cracking Down on Drug Dealers
Cracking down on drug dealers may reduce the number of drugs sold, but it can also lead to a spike in crime and violence. Drug dealers need law and order to protect their buyers and keep their territory safe. If they no longer have the incentive to do so, crime may increase. The violence surrounding drug dealing is mainly about property rights, and when drug dealers are forced out of their established territories, they may fight with other gangs to find a new place to sell drugs. Therefore, it is essential to consider the potential consequences of cracking down on drug dealers before taking such actions.