Angus Deaton on the Financial Advantage of College Degrees
Mar 28, 2024
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Nobel Prize-winning economist Angus Deaton discusses wealth inequality, healthcare systems, and the impact of education on societal divides. The conversation covers topics such as cyber preparedness for finance leaders, the minimum wage study debate, and the effects of education on social and health dynamics.
Higher education significantly impacts income inequality, serving as a protective factor against adverse health outcomes.
Healthcare inequality in the US results from high drug prices and lack of price regulation.
Minimum wage policies prioritizing worker well-being can benefit both employees and the local economy.
Immigration can impact wages, with high levels potentially contributing to income inequality.
Deep dives
Effects of Cyber Preparedness on Business Resilience
Understanding the importance of cyber preparedness in the face of cybercrime threats can help finance leaders in making their business resilient, even in a shifting landscape. Despite a lack of confidence in handling ransomware attacks, being proactive can turn risks into opportunities.
Insights on Inequality and Healthcare Costs
Inequality in the U.S. is linked to the high cost of healthcare, marked by significantly higher prices for drugs and procedures compared to other countries. Factors such as the lack of price regulation and profiteering contribute to this disparity, impacting individuals and the economy.
Impact of Minimum Wage Policies on Employment
Studies showcasing that modest increases in the minimum wage do not necessarily lead to higher unemployment challenge the traditional economic models. Implementing minimum wage policies that prioritize worker well-being over profit margins can benefit both employees and the local economy.
Immigration's Role in Wage Depression and Inequality
The debate around immigration's impact on wages reveals complexities beyond typical economic arguments. Evidence suggests that high levels of immigration, especially low-skilled immigrants, can potentially contribute to reducing wages for native-born Americans and intensify income inequality in the country.
Factors Driving Inequality in Immigration
Skilled workers from Mexico and South America flooded the US labor force during the building boom, raising concerns about shifts in skilled labor demographics. Immigrants entering the US encompass a mix of highly skilled individuals and unskilled workers, leading to a bimodal distribution of skills not typical in the general population. Countries like Australia prioritize wealth tests for immigrants, attracting diverse skilled individuals from various regions.
Education's Impact on Inequality
A critical distinction in inequality lies between individuals with a four-year college degree and those without. The gap in earnings between individuals with and without a college degree has doubled over the years, emphasizing the significance of higher education in income disparity. The significance of a college degree extends beyond financial benefits, serving as a potential shield against adverse health outcomes like opioid overdoses and suicide, highlighting the multifaceted advantages of higher education.
Addressing Inequality through Economic Policies
Addressing inequality requires a holistic approach beyond focusing solely on income or consumption levels. Emphasis on broader well-being indicators like health, community, and power dynamics is essential. Promoting initiatives like reshoring, investing in infrastructure, and boosting unions can counteract deindustrialization's impact. A focus on public goods and community assets, along with comprehensive economic policies, can potentially alleviate disparities and improve overall living standards in society.
Bloomberg Radio host Barry Ritholtz speaks to Angus Deaton, senior scholar at the Princeton School of Public and International Affairs. In 1976, he became a professor of econometrics at the University of Bristol and moved to Princeton as a professor of economics and international affairs in 1983. He became an emeritus professor in 2016. In 2015, he received the Nobel Memorial Prize in Economic Sciences. He is the author of almost 200 papers and six books, including The Great Escape: Health, Wealth, and the Origins of Inequality; Economics in America: An Immigrant Economist Explores the Land of Inequality; and, with Anne Case, of Deaths of Despair and the Future of Capitalism.
