Thanks, and an apology

Two short notes before I get back to kitchen and put together a Maryland Road Pie, inspired by their use of molasses and salt as deicing tools.

First Thanks! are due to a reader who sent a subscription to The Week. I got my first issue yesterday and thoroughly enjoyed it.

Secondly Apology: In my last "This Week in Pie Making", I made a gross exaggeration of the GOP's ills, and cast them as similar to the most monstrous regime in modern history (by body count and capacity for destruction, anyway, the Nazis, Khmer Rouge, Maoists and a few others could make a case). That is not appropriate, and does a great disservice to both the memories of that regime's victims and the quality of political discussion today. For a blog whose posts frequently end with an invitation to stop by for dessert, breakfast, or even to stay the night, such commentary is even less appropriate. "Come on over, you Bolshy hypocrite!" is not a credible invitation. For a desert-bred pie maker, such inhospitality is shameful, and I apologize.

Yes, this is in part a response to the recent tragedy in Tuscon, AZ. But for a generous offer from my current employer, I would be in Tuscon right now, and Arizona is where I grew up. Personally, I tend to agree with the Economist's take on the events, Arizona has never lacked for crazy people or guns. Most heartening, however, has been renewed interest in the quality of mental health care in the US and some signs that we are actually going to Take It Down A Notch For America.

I will do my part. Even when I disagree with people and am uncomfortable with what they are saying or doing, I will endeavor to write about it such a way as to invite constructive commentary and those very same people for pie.

This week in Pie Making (Jan 2-7, 2011)

The big news of the week is that the leader of the red states (not the Red states) assumed control of the US House of Representatives. He quickly promised to do things for the People, excised undesirable parts of the founding document his comrades found objectionable and ensured that enemies of the People would remain in isolated camps. Fortunately Mr. Boehner is not from Georgia, otherwise a satirist might go too far. Besides, he's more of a Trotskyist anyway (economic planning with debt-based international support, via la revolution!). This will make his job a lot more interesting.

In more mundane matters, it looks like the Consumer Finance Protection Agency has picked up a very powerful member: Mrs. Petraeus. Taken with the selection of Daley as chief of staff, it looks like we're in for the politics of making nice with powerful people over the next couple of years.

Continued pressure on oil supplies is leading to a quiet revolution in transportation and your pie maker's preferred mode of transport is getting additional support. Even gadgets are getting into the efficiency act.

The biggest international news is probably that a major oil exporter is about to split along racial and religious lines, with nary a mention on the Oil Drum. This split is worth keeping in mind as the issue of the Huck Finn edits floats around. It highlights how maintaining a cosmopolitan national identity is absolutely critical to the success of modern economies.

On the security front, things are very interesting. First of all, China's unveiled a new "stealth" jet. Despite this SecDef Gates will continue doing his thing, highlighting the general reduction in the national fear level in the US. We even have what appears to be terrorism in response to disquieting highway signs that barely made it to the front page.

Educating Pie Makers: College (part 2: The Stakeholders)

In the previous post, we found that "ignorance" could buy a yacht and two trips around the world, while education gets one a piece of sheep paper. Currently, this cost is spread over four major sets of stakeholders: governments, charities, employers and students. Each has their own set of interests and expectations from a students' education, but it's important to understand the Opportunity Cost of college to all of them.

The Government: When a government contributes to undergraduate college education, it's looking for some combination of three things: (1) keep young people out of the workforce for a few years, (2) provide a better educated workforce to compete for higher value-added industries and (3) improve the quality of its public discourse. Historically, (1) has paid off quite well, and unemployment rates have been kept under control in societies with people living and working for longer periods. (2) is a bit more tenuous, given that highly skilled people can move to greener pastures, but often they send money if they do migrate, so probably better to pay for students than sailors. Unless, of course, the government runs a maritime nation with a shipbuilding industry suffering from lack of demand . . . (3) has been a manifest failure.

Charities and Foundations: These groups generally want to make experiences that they enjoyed or felt were formative available to others. Since many are directly tied to prominent alumni of various institutions with a strong interest in seeing their alma mater succeed, it's safe to say their role will remain to reduce the costs of, and possibly increase the benefits of, education for students at favored institutions. This situation will likely persist until your pie maker can endow Bake Around the World fellowships.

Employers: The cost/benefit analysis for employers heavily favors having a set of institutions that can handle professional training, mostly at the Master's level in the US. Meanwhile, many express dissatisfaction with the quality of Bachelor's graduates. If this continues, they may decide to use non-academic means of determine recruit quality, which would pretty dramatically change the calculation for

Students: The advice your pie maker gives to all students begins with this: do not pursue any degree until you have an idea what you want to do with it. If after starting you find you don't need it, stop, unless you both want to and can afford to continue. Steve Wozniak and Bill Gates are doing alright, and it's better to be broke and unemployed than heavily indebted and unemployed.

On the other hand, there are some strong personal benefits to being an alumnus of your chosen alma mater. There's no formula to assess the actual value of this, and assuming the student can afford the education, it comes down to a simple question of whether it is worth the Opportunity Cost to the student. Gut reactions are important for more than just pies.

To directly answer comment from the previous post, it's possible to come up with a formula that, assuming several uncertain things are known, can approximate the net benefit in terms of income:

if( (I_B - l_c)*p_F*p_E*d_B > I_HS)
Go to school
else
Go to work

Here, I_B represents the income potential with a Bachelor's degree, I_HS represents high school income after four years in the workforce. I_B must be reduced by the cost of servicing student loans, l_c. This quantity should be modified by three factors: 0 < p_F < 1, the probability* of student finishing despite risks such as lack of interest, mental or physical illness and uncertainty about finances; 0 < p_E < 1, probability of employment with one's chosen degree; and 0 < d_B < 4ish, how badly one wants to study in a particular field. There are far too many factors that play into each of those to give a more detailed answer, but anyone struggling with this decision is welcome to stop by the Fuzzy Wups to discuss. We have pie and just discovered the joys of grinding spices in with coffee.

*Quants: Yes, this is a flagrant abuse of probability theory and I fear someone will take this humble discussion aid and turn it into an AIG-risk-metric-esque tool to fool people into bad decisions. On the other hand, there's already plenty of such tools out there, and at least mine comes with this disclaimer.

Educating Pie Makers: College (part 1)

"If you think education is expensive, try ignorance." --Derek Bok

Whenever someone points out the high, and rapidly increasing, costs of college education, Derek Bok's quote gets included in the open salvos of the argument. Often this leads to a round or two of competitive econometrics comparing employment rates, lifetime earning potential and even a "happiness" study or two which generally favor keeping high school graduates idle for another four years or so to give them a shot at a better life.

These statics make a compelling case for individuals, foundations and governments to provide large amounts of money for higher education. This has reduced the barriers to college entry to the point that a large percentage of the jobs available now require at least a bachelor's degree, and an increasing number require a masters' or PhD. For the student, between federal subsidies, family money, and private debt, the actual cost is generally hidden, and fear of the unknown, but presumably high cost of "ignorance" makes the choice simple.

What I haven't yet seen is someone actually trying to explain what one could do with the cost of a college education while remaining "ignorant." Any statistical approach is only as good as the assumptions behind the models they use to aggregate their data, often with the implicit narrative that there is a "generic person" of which we are all small variations. Here at P&P we harbor strong doubts about this idea, it sounding an awful lot like saying there is a "standard" pie. Your pie maker had a "standard" apple pie when he lived near Michigan's apple country and could buy them by the bushel for a few cents a pound. In different circumstances, he's moving into pumpkin and winter squash, and if the people to whom he's loaned pie plates do not return them, then he may be making a lot of form-free pies in the near future.* The point is, if we just look at econometrics, we're not fulfilling Mr. Bok's suggestion.

Instead, let's try ignorance. Or, to be more precise, let's imagine spending the cost of college on something else and see where that leaves us.

At first, that means defining our assumptions. For the "cost of college", this thought experiment will assume full tuition plus room and board at a private institution. This is significantly more than the "average" student pays, but it does cover the amount that is paid by states and private donors at other institutions. Based on College Board statics, $37,000/yr is a rough estimate if books and travel to and from campus are included. Over four years, that gives us $148,000 to work with assuming tuition doesn't rise at its typical 5% annual rate.

That's a lot of money. What if instead of college a hypothetical student bought a nice, seaworthy Beneteau 361 for $99,000? That could solve the non-student's housing needs, and allow precisely the sort of mobility that defines a modern career. With the rest of the money, it would be highly prudent to buy another ~$6000 worth of training (not education!) from a place like Sunshine Coast. That leaves $33,000 to provision a trip to sail around the world, at a cost of roughly $1250/month. Assuming the non-student takes it slow and completes one cirumnavigation per year, that allows 2 whole trips, with money left over for contingencies.

Now we can actually answer Mr. Bok's challenge. Putting a student through college costs the student, family, charities and government a really nice yatch and two trips around the world. Only a narrow definition of "ignorance" would describe the learning that would happen on such a voyage, and at the end the non-student would have a place to live, a global network of acquaintances and a better personal understanding of math, science and law than nearly every college graduate in the world.

What can a college offer its students that would compete? Comments are most welcome.

*If you currently have one of my pans, send a note and I'll bring you a free form pie in exchange. No, this is not meant to encourage people to "borrow" more of them.