Pick the separating equilibrium

College degrees vary pretty greatly in expected post-tertiary earnings. Some provide a lot of ephemeral benefits, others provide higher earnings. I'm agnostic about what students should pick, though I expect that government funding should be linked to likely positive external benefits from any particular degree rather than to the degree recipient's expected earnings.

Oregon's proposed a solution that's not far from what New Zealand had a few decades ago: free tuition, but high marginal tax rates.

Passed unanimously by the Democrat-controlled state Senate Monday after it had already cleared the also Democrat-controlled House, the bill would create a program called "Pay Forward, Pay Back" by which students wouldn't pay a dime at the time of study at any public institution for higher education in Oregon. Instead, students who qualify as Oregon residents would sign a binding contract that would require they pay a percentage of their post-college income back to the state every year for up to 24 years.

Students have some flexibility in choice of state. It's a bit of a hassle to get yourself registered as a state resident, but it's not crazy hard. I was in-state in Virginia.

If the contract is really binding, I expect that Oregon's Fine Arts and Social Work departments will see a pretty strong increase in student numbers while those wanting a degree in Finance will start heading out of state. Differences in tuition across majors are pretty small compared to differences in lifetime earnings.

When New Zealand ran this policy, they also ran a pretty exclusive university entrance policy: a rather smaller fraction of high school graduates were eligible for university. It will be interesting to see how things play out in Oregon.

It only works if you don't tell them!

Even as a farm-boy from Southern Manitoba, I'd heard that Van Halen required a bowl of M&Ms backstage with all of the brown ones removed. It seemed pretty ridiculous. But, before it was a story of rock star prima donna behaviour, it was for Van Halen an excellent signal of overall venue capacity. Writes Fast Company:

Van Halen did dozens of shows every year, and at each venue, the band would show up with nine 18-wheelers full of gear. Because of the technical complexity, the band's standard contract with venues was thick and convoluted -- Roth, in his inimitable way, said in his autobiography that it read "like a version of the Chinese Yellow Pages." A typical "article" in the contract might say, "There will be 15 amperage voltage sockets at 20-foot spaces, evenly, providing 19 amperes."

Van Halen buried a special clause in the middle of the contract. It was called Article 126. It read, "There will be no brown M&Ms in the backstage area, upon pain of forfeiture of the show, with full compensation." So when Roth would arrive at a new venue, he'd walk backstage and glance at the M&M bowl. If he saw a brown M&M, he'd demand a line check of the entire production. "Guaranteed you're going to arrive at a technical error," he wrote. "They didn't read the contract.... Sometimes it would threaten to just destroy the whole show."

In other words, Roth was no diva. He was an operations expert. He couldn't spend hours every night checking the amperage of each socket. He needed a way to assess quickly whether the stagehands at each venue were paying attention -- whether they had read every word of the contract and taken it seriously. In Roth's world, a brown M&M was the canary in the coal mine.

Of course, once Roth was famous for this clause, it couldn't possibly have continued to work, could it? After that, it only signals whether the venue is willing to put up with seemingly silly performer demands rather than whether they've paid attention line-by-line to the contract. It can't have been long before the clause was common knowledge among venues. Article 127 should have been "Don't talk about Article 126".

HT: Elemental Links