Read the whole thing; I provide a sampler below.
Markets do many useful things, but they did not solve the problem of race. Not in America. That's probably heresy to admit it as a Chicago economist, but I became convinced that a doctrinaire notion that markets would solve the problem of discrimination is false. Civil rights legislation and civil rights activity played huge roles in eliminating overt segregation in the United States. On the other hand, I also believe that affirmative action in the post-civil rights era has played very little role in elevating the status of blacks. It is important to notice that many blacks are not in the workforce, and the trend of workforce withdrawal even among prime-age black males has increased over the past 20 years. Since their wages are missing, we don't know what true black-white gaps are.On nature and nurture:
I'm still very interested in the question of black-white disparity, but I think about it quite differently than I used to. The blatant discrimination that existed in the South before Title VII was in large part eradicated by civil rights legislation. It's far less of an issue today. There's still disparity, of course, but it's not now primarily due to discrimination. I now think it's much more due to the differentials in family environments and the fact that the initial life circumstances of racial and ethnic groups are very unequal. And understanding that, I think, is the source of solving the black-white problem, not new civil rights laws, and certainly not affirmative action laws.
Enriched early intervention programs targeted to disadvantaged children have had their biggest effect on noncognitive skills: motivation, self-control and time preference. We know that there's a scientific basis for this finding. The prefrontal cortex, which is a center of these noncognitive skills, matures late. The executive function, the very definition of ourselves as people, the way we motivate ourselves, these things are malleable until quite late stages—into the 20s, according to research by neuroscientists. This means that in principle we can modify these behaviors. Noncognitive skills are powerfully predictive of a number of socioeconomic measures (crime, teenage pregnancy, education and the like) as I show in a recent paper with Jora Stixrud and Sergio Urzua.
Kids in the Perry Preschool Program, an early childhood intervention, are much more successful than similar kids without intervention even though their IQs are no higher.
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If we don't provide disadvantaged young children with the proper environments to foster cognitive and noncognitive skills, we'll create a class of people without such skills, without motivation, without the ability to contribute to the larger society nearly as much as they could if they'd been properly nurtured from an early age. Neglecting the early years creates an underclass that is arguably growing in the United States. The family is the major source of human inequality in American society.
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And you ask, what do the GEDs earn? They earn what high school dropouts who do not get GEDs earn, once you adjust for their somewhat higher cognitive ability. And what's the difference between GEDs and high school graduates? Well, GEDs have the same Armed Forces Qualifying Test (an achievement test) scores as high school graduates who do not go on to college, so they're just as smart as those people. But they lack something. They're missing motivation, self-control and forward-lookingness. I call these noncognitive skills. In recent work with Jora Stixrud and Sergio Urzua, we find strong evidence of pervasive importance of noncognitive skills as the key to explain success and failure in socioeconomic life.
These findings have major implications for American educational policy—for example, the No Child Left Behind Act, and all the related policies which are predicated on the assumption that we succeed with an educational intervention if we improve on test scores.
On public job training:
I think these observations on human skill formation are exactly why the job training programs aren't working in the United States and why many remediation programs directed toward disadvantaged young adults are so ineffective.
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Cognitive skills such as IQ can't really be changed much after ages 8 to 10. But with noncognitive skills there's much more malleability. That's the point I was making earlier when talking about the prefrontal cortex. It remains fluid and adaptable until the early 20s. That's why adolescent mentoring programs are as effective as they are. Take a 13-year-old. You're not going to raise the IQ of a 13-year-old, but you can talk the 13-year-old out of dropping out of school. Up to a point you can provide surrogate parenting.
So, coming back to job training and other interventions targeted toward disadvantaged adolescents, mainstream discussions miss the basic economics of the skill formation process.
On communicating economic ideas:
We should recognize the fundamental intelligence of most people. Some people are smarter than others, of course, but there's such a thing as common sense, and common sense often prevails. If you can appeal to that common sense, you've done your job as a communicator. An appeal to common sense should not end the discussion. One has to back up any claims, especially empirical claims. Thus, for many, it is “common-sensical” that reducing class size raises test scores of students and is a policy worth funding. When the common sense is tested against data, the effects of classroom size reduction are second order in character, especially compared to the effects of early childhood interventions that cost the same.