The Marginal Utility of Education

Economists define “marginal utility” as the usefulness that is gained from an additional amount of some good. E.g., if you already have a washer and a dryer in your house, what is the marginal utility of having a second washer and dryer? Of another bottle opener when you already own three of them? Not much, for most people.

Charles Karelis makes an interesting argument using the idea of marginal utility to explain why poor people remain poor. Like all arguments at this level of abstraction, it illuminates at the same time as it is much too simple to carry the weight he wants it to.

It might seem like “the poorest people should get the most from a dollar of earnings” and that because they have so few of them, they should get more “satisfaction” from an additional dollar. But Karelis cites a range of research that indicates that it’s actually usually true that “the least useful bit of good is the first, and the first useful bit is the last.’ And the key reason is “because poor people, by definition, typically consume at low levels, where goods serve to relieve unhappiness and not to bring positive satisfaction.” In other words, “very poor people typically benefit less than moderately poor people from small increases in consumption—not more.” And this is even more true for the difference between the poor and members of the professional middle class (like most of us).

The same argument seems likely to hold in the case of education. A little bit more education can make a perceptible difference only at the upper levels. For a kid who can’t read much, reading a little better doesn’t help much. But learning a few more words could really affect the life of a kid taking the SAT.

More generally, relatively small changes in the quality of education at the bottom aren’t likely to have much impact on the life chances of poor kids. In contrast, a key skill or piece of knowledge may turn out to be just the “edge” that the child of a middle-class professional needs.

In other words, if I’m a poor kid and I hate school, why bother to work harder? The amount of additional work I’d need to put in to have it actually pay off in coherent satisfaction is much greater than it is for the middle-class child.

To add insult to injury, middle-class contexts are much more likely to foster effective learning. Work in schools populated by poor children is much more likely to be “work” with a more limited relationship to cognitive advancement.

This problem is intensified by the fact that education is to some extent a game of credentials. It isn’t so much the qualitative amount that you learn that matters, but instead whether you do or do not graduate and receive a diploma.*

The middle-class child is, in all likelihood, going to graduate. The only question is at what rank, with what GPA. There is a good chance, however, that the “average” inner-city kid won’t graduate. Therefore, any additional work she puts in on any given day is likely to be largely lost in terms the credential market will understand.

The upshot of all of this is that it may, in fact, not make much sense for poor kids, on a purely pragmatic level, to put more effort into her work on any particular day. There just isn’t enough marginal satisfaction received—either at that moment or in the future—to make it worth the sweat.

Of course, if activities in educational settings were intrinsically motivating, this wouldn’t be much of a problem. The end goal wouldn’t matter that much. But the truth is that most education in most places, especially in middle and high school, isn’t very enjoyable. And we haven’t been very successful at changing this, especially, again, in the most distressed schools.

What could we do to encourage marginalized students to work harder when the pragmatics of the situation indicate that it isn’t an illogical response just to look elsewhere in their lives for real payoffs?

Perhaps we should work harder to make education intrinsically rewarding and worry less about final outcomes. Could we imagine cutting back on reading and math instruction and focus on music and art and sports? Reading cool stories to children instead of trying to get them to learn boring reading skills? Maybe if we helped poor kids love school throughout their entire experience they might end up learning those other things as well, or at least not less well.

This is different from the usual “trades” vs. “college” education argument that revolves around the likely final employment resting place of these kids. It refocuses us on the now with not so much emphasis on what the learning in the now is “for.”

Most parents of poor kids would almost certainly oppose this. For good reason, they want their kids to learn like privileged kids. “Stop experimenting on my kids!” “How dare you say that it doesn’t matter what my kids learn!” And perhaps they are right.

But this leaves us in a conundrum. How do we find a middle path between the enormous abstract value that poor families often hold for education and the limited marginal utility of additional educational effort for their actual children?

[* The problems with the payoff from a diploma is complicated, of course, by the fact that the credentials achieved by poor kids are usually much less valuable than those received by the more privileged. As Wilson showed, many poor, inner-city high schools are actually red-lined by employers who treat graduation from them as a visible mark of a person’s inferiority. And the return to these kids from graduation is, in monetary terms, quite limited—although this increases, of course, with college education. At the same time, since poor kids may actually learn less in their classes, it may be the credential itself—however tainted it may be—more than the cognitive impact of their experiences in school that may be most important to their future life chances.]