Yes, education, but what kind?

In his NY Times column today, David Brooks gives his solution to rising inequality: Better education. It is hard to argue with that prescription, except to note that it is now a bit of a platitude.

If you want to think about more specific policies, one thing to read is the book Inequality in America: What Role for Human Capital Policies? with articles by University of Chicago economist James Heckman (with coauthor Pedro Carneiro) and Princeton economist Alan Krueger, based on a symposium they gave at Harvard a few years back.

What do we learn? Here is an excerpt from a review of the book:

Reviewing specific programs, Carneiro and Heckman find that preschool education is highly effective, although with more impact on noncognitive than cognitive abilities. Schools are much less productive, and returns are low to increased investments in K-12 education in the form of higher salaries, smaller classes, and so forth. They suggest that structural changes that increase school choice and competition should have higher returns, but are careful to note that returns to increased investment in schools are limited by what families contribute to the production process. They also conclude that added investments in job training and higher education have low rates of return, particularly for lower ability adolescents and adults.

Brooks is right to focus our attention on education, but our aspirations should be modest. Even the best designed human capital policies are unlikely to reverse the rise in inequality observed over the past several decades.