Wednesday, August 25, 2010

How Much Was Your Kindergarten Teacher Worth?


How much is a good kindergarten teacher worth? A lot more than you might think, at least according to this article in the New York Times, which suggests that we should be paying good teachers $320,000 a year.

Perhaps this provides an interesting commentary on our market system. At its core, capitalism is based on value. People value goods, entertainment, or whatever else, and are willing to pay a certain amount for it. As it turns out, they’re willing to pay Jay-Z more than they are the aforementioned quality kindergarten teacher.

Is the mere fact that people happen to value something enough to justify how much certain occupations make on a philosophical level? Maybe not. It certainly isn’t logic we apply consistently. Take drug dealers. Lots of people (too many) value the utility they get from crack and heroine. Yet, we don’t celebrate successful drug dealers or condone paying them large salaries. Just the opposite. We do everything we can to put them in jail. You might say that we do all this because objectively, having lots of drugs on the streets ultimately hurts society in myriad ways. But to embrace an objective measure of value is to dispute one of the cornerstones of our capitalist system, namely that the best economic system is one in which decentralized consumers make millions of decisions about what they value.

But then again, maybe the relatively low salaries for the kindergarten teacher stem from a failure of our market system to function as designed instead of a problem with the system in theory. If nothing else, the current financial crisis has raised the question of how rational consumers and investors really are. People make irrational, overly exuberant decisions over the time frame of just a year or two. It only stands to reason that they can do so over a 20 or 30 year time span. To value a teacher properly, we have to think about how much money a good teacher will bring in.

But kindergarten students don’t make money a year after they have that teacher; they make money 20 years later when they get a profession. As the study showed, the kindergarten teacher can have a dramatic effect on earnings (as much as $1,000 a year by age 27). To properly value a teacher, people need to be able to make a reasonable guess at how much a good teacher can bring into society in the form of increased productivity, as well as lower costs for welfare and policing because more kids from poor backgrounds have a shot at a decent living. That process will always be fraught with difficulty. Do we rely on test scores? Parent evaluations? A special formula which combines several factors?

Before we render any judgments on our compensation system more such studies must be done. I look forward to seeing them.

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