The BizOp News

Robin Hanson certainly thinks so.

He has a provocative post at Overcoming Bias about the relationship between expertise, credentials and rationality.

"Yesterday I reported that top med school docs are no healthier for patients. Today I report that even at private schools, teachers who are fully certified do not help students perform any better on math and science tests:

Data from the National Education Longitudinal Survey of 1988 (NELS:88) were used to investigate the effect of teacher licensure status on private school students' 12th grade math and science test scores. This data includes schooling and family background information on students that can be linked to employment information on teachers. We find that, contrary to conventional wisdom, private school students of fully certified 12th grade math and science teachers do not appear to outperform students of private school teachers who are not fully certified.

My urban econ text says:

Studies have consistently shown that graduate coursework (e.g., a Master's degree) does not affect teacher productivity.

I expect patients are willing to pay more for top med school docs, and parents are willing to pay more for educated and certified teachers.

And I expect that this would continue even if patients and parents knew the above results.

I suspect most of the demand for teachers, doctors, and many other professionals comes from folks wanting to affiliate with certified-as-impressive people.

And merely making patients healthier or making students perform better doesn't count much toward impressiveness, relative to academia-certified impressiveness."

Let's assume that the premises, or factual studies, are correct. That within a tolerable margin of error, individuals who strain and obtain impressive academic credentials are no better than average performers in their chosen profession.

So, the strainers and obtainers are frauds: their impressive credentials signal no superior operating skill.

Ok, those are the assumptions.

Now for the conclusion.

Robin claims that even if we knew or could identify these fraudsters, we would still act as if we were taken in by their false advertising of superior skill.

This is a very provocative claim - cutting to the heart of the well loved, but wrong, due diligence model behind our misleading advertising laws.

I cannot tell whether Hanson believes his conclusion to demonstrate irrationality, or whether there is a grudging concession to the fact that demand for credence goods, goods in which the utility gain or loss of is difficult to measure even after consumption, may reasonably involve other factors.

But for legal professionals, this is an important debate. Are the actual skills of lawyer only tangentially related to his or her pedigree? If so, might this not explain the high cost of access to the law: too many monied clients chasing too few lawyers with the right pedigree, but average operating skill?

Interesting view.

Comments

On your view, is self-deception ever rational? (I believe that self-deception can be reasonable, but we lack an economic or formal explanation, translation, of why that is so.)

Posted by: michael webster | August 27, 2008 11:53 PM

Interesting. Not sure that I agree. But let's find out. What if faced with a number of equally good alternatives, some of us needed to coordinate our choices on the "right brand"? We use pedigree as the focal point. We know that we are deceiving ourselves but believe correctly that if enough of us deceive ourselves about the relative skill related to pedigree, then there are other network effects which may turn out to be valuable.

I am explicitly using the metaphor of a placebo here. A placebo requires a false belief in order to be effective, at least as I understand the science.

Might there not be an equivalent group placebo?

Posted by: michael webster | August 27, 2008 8:27 PM

I'd say more self-deception than irrationality. We are getting something we want - it just isn't what we think we want.

Posted by: Robin Hanson | August 27, 2008 7:24 PM