Freaks and Geeks; How Freakonomics is ruining the dismal science.

Related Links: Steven Levitt's response to Scheiber's argument, and Scheiber's response to Levitt.

One of the few papers I actually read as a grad student was written by a pair of economists named Josh Angrist and Alan Krueger. In the early '90s, Angrist and Krueger set off to resolve a question that had been gnawing at economists for decades: Does going to school increase your future wages? Intuitively, it seemed obvious that it did. When you compared the salaries of, say, Ph.D.s with those of high-school dropouts, the grad-school set almost always did better. The question was whether education accounted for the difference. What if it was simply the case that smarter people spent more time in school and that their bigger salaries reflected intelligence, not education? One couldn't be sure. The only way to get to the bottom of it would be a ghastly social experiment, wherein you took a group of students and randomly sent half to the local vo-techinstitute while forcing the other half to study feminist literary theory. Even an economist wouldn't be so audacious.

That's where Angrist and Krueger came in. In the paper, they pointed out that two features of the public school system allowed you to answer the question without all the uproar. First, most states force students to attend school until age 16. Second, for many decades, students started school the year they turned six. The upshot was that, if I were born in January and you were born in December of the same year, and we both dropped out at 16, then the rules forced you to stay in school almost one year longer. (We’d start school the same year, but I'd turn 16 midway through tenth grade and you'd hit 16 midway through eleventh.) The additional schooling foisted upon one group by this arbitrary state of affairs produced a scaled-down version of our experiment, allowing Angrist and Krueger to conclude that education did, in fact, help people earn more money.

I probably first came across this paper in 1999. At the time, it struck me as a neat trick, certainly a welcome diversion from the stultifying technical literature economists must imbibe, but largely unremarkable beyond that. Three years later, having escaped the academic track, I was nonetheless spending a lot of time in Cambridge, Massachusetts, where I moonlighted as an economics poseur and consorted with the smartest young economists in the world. And one of the things I was shocked to learn was that Harvard grad students had invested the Angrist and Krueger paper with totemic significance.

It quickly became apparent that the way to win acclaim as a grad student was to devise a similarly ingenious method of tackling a problem. Several years after his paper on schooling, Angrist noticed that the Armed Forces Qualifying Test had been misgraded for a few years in the late '70s. This had opened the doors to thousands of subpar applicants and allowed Angrist to compare the lucky underachievers with the people rejected once the glitch got corrected, thereby isolating the impact of military service on wages. The practical effect was to send the grad students scrambling to find other instances in which life- altering decisions had been handed down incorrectly. In 2000, a Harvard professor named Caroline Hoxby discovered that streams had often formed boundaries to nineteenth-century school districts, so that cities with more streams historically had more school districts, even if some districts had later merged. The discovery allowed Hoxby to show that competition between districts improved schools. It also prompted the Harvard students to wrack their brains for more ways in which arbitrary boundaries had placed similar people in different circumstances.