SpongeBob SquarePants and the Economics of Identity

SpongeBob SquarePants lives in a pineapple under the sea, makes the best burgers in Bikini Bottom, and loves life.  

Akerlof and Kranton's Economics of Identity explains why SpongeBob is so happy. An identity is a sense of self, "this is who I am". Every one of us has many identities - our gender, nationality, religion, and so on. Doing things that reaffirm our identity make us feel good. Doing something that violates our identity, for example, going into the opposite-sex restroom, cause inner conflict. SpongeBob is happy because his life experiences - flipping burgers - reaffirm his sense of himself as an excellent fry cook. 

SpongeBob's story has a moral for education policy. Schools and universities shape people's identities. According to Akerlof and Kranton, "schools not only impart skills. Schools also impart an image of ideal students, in terms of characteristics and behavior."

SpongeBob is not an ideal student. He fails his boating test and terrifies his boating instructor, Mrs Puff. His talents are innate, not learned. But this does not matter - his sense of self is not tied to his educational achievement. Squidward Tentacles, SpongeBob's co-worker, probably did better in school than SpongeBob did. He has intellectual pretensions, to play clarinet and to dance. But these aspirations only make him miserable in his job as a cashier at Krusty Krab.

Canada, like many other countries, has expanded access to post-secondary education, but the demand for educated workers has not kept up to the supply. A study by Marc Frenette based on data from the 1980s and 1990s found over thirty percent of university graduates were over-qualified for their jobs. 

Studies also find that over-qualified workers are less satisfied at work. Now it could be that some of these workers are in jobs they are over-qualified for because, like Squidward, they are not as talented as they think they are. But still, there is a real possibility that education can make people worse off if it creates a dissonance between people's identities ("I am an economist") and their lived experience ("I am a greeter at Walmart"). 

This line of reasoning can quickly lead to a Brave New World where people are identified as potential leaders (alphas) or workers (epsilons) at an early age and conditioned, trained and drugged so that they are happy with their lot in life. Indeed one could imagine SpongeBob SquarePants and the joys of making burgers being required viewing for epsilons in a 21st century dystopia - Scooby Doo and his gang are much too meddlesome and inquisitive.

Despite the real dangers of over-qualification, I want my children to go to university, because I know that without a university education they have few chances of finding interesting and/or adequately paid employment. And I want them to experience the joys of intellectual discovery and ill-lit student pubs.

Going to university is still a rational choice for many students.

And universities make more money when they admit more students. Universities have high fixed costs (buildings, facilities, tenured faculty) and low marginal costs. I get paid the same whether I teach 40 students or 400, so the university has every incentive to put as many students in front of me as possible.

But the outcome of rational individual calculations is ever-increasing numbers of graduates chasing a limited number of good jobs, and under-employed Squidwards.

In Canada, the problem of over-qualification is exacerbated by our immigration system. Canada admits immigrants on a point system that gives preference to highly educated candidates. However research by Phil Oreopoulos suggests that Canadian employers place little to no weight on foreign credentials and experience, while Steven Wald and Tony Fang and others have found that immigrants are more likely to be over educated for the jobs they hold.

Moving from one country to another has profound implications for a person's identity  - are you now Canadian, hyphenated Canadian, or do you retain the identity of your ancestors? Do you become a Squidward, working in a job you despise? Or do you build your self-respect by finding an identity outside of your employment - through family, community, sports or religion, perhaps. People, especially in the US, used to talk about the idea of a melting pot - people shedding old identities and forming a new common culture. But when I googled 'melting pot' just now, the top hit was for a fondue recipe.

Sometimes a melting pot is nothing more than a pot for melting cheese or chocolate. And sometimes a talking sponge is nothing more than a talking sponge - absorbent and yellow and porous.

Comments

[Guillaume]

Very interesting post Frances. It raises the question of what is going to happen to my generation in an age of diminished expectations. I'm currently in the process of hiring somebody for a journalism-related job (a very hard hit area) and I'm astonished by both the quality of the young candidates and the gap between their expectations and reality.

Immigration is a difficult matter to handle, as are all questions of rationing. How could we devise a better system? A purely employer-led immigration policy? That seems difficult to implement. But there is certainly a disaffection among immigrant workers in Canada, perhaps because so much is promised to them in the first place. Canadian immigration is being actively marketed abroad by a nebula of government and private sector actors, which seems like a poor way of anchoring expectations about what life here will really be.

[Frances Woolley]

Guillaume, I'm planning another post on the expectations issue. I agree with you about an employer-led policy being difficult to implement. It would be vulnerable to corruption - "pay me $50,000 and I'll create a job for you and fill in all the paperwork." And wasn't there that case when lap-dancers were deemed to be workers in short supply who had to be hired from abroad?

The Netherlands has a video that is required viewing for potential immigrants something along the lines of "this is what life is really like in the Netherlands" complete with same sex couples holding hands and nude sunbathers. Perhaps Canada should do one featuring underemployed engineers?

[Andrew F]

Guillaume, you mean their expectations far exceed reality?

[Guillaume]

I'm not sure the Netherlands is where we should draw inspiration for immigration policy (they just gave an anti-immigration party 25% of the seats), but I would vigourously support showing them videos on what winter is really like here beyond dog sleighs and ice skating!

[Neil]

Another aspect of the education game, I've found, is that if you find a good job right out of school, you will continue along the good job path. However, when an educated person finds they can't find a good job, and just settles for any old job, they are forever stuck on that path because each potential employer looks at them with "a commerce degree and 3 years of AP experience...what's wrong with this person?"

University has become the new high school. Getting even a crummy white collar job without it is difficult, so everyone goes, but because it trains people for so much more than the jobs available, it leads to a lot of depressed people in the world.

And sadly, the oversupply of educated workers who don't want to do manual work has led to an inversion of the wage gap, so while you're right that it's difficult to find interesting work without a degree, finding adequately paid work is no problem. Usually these low-education jobs are more cyclical, but with EI to fill the gap, adequate pay is not the issue.

[Guillaume]

Andrew: Knowing more than a few immigrants, it seems to be the case for many of them. I might be wrong, but I'd say it probably takes almost over 5-6 years to get fully integrated at an adequate level if you were not educated here (and a lot more efforts than natives to prove your worth. The engineer cab driver is not a myth either. Different people, different outcomes but I don't think I'm that far off the mark. A friend of mine got to be a recognized JUNIOR engineer after 4 years (although he did get an engineering-related job), I'm not sure Immigration Canada advertised this as such.

I'm not saying that immigrating to Canada is harder than anywhere else (it clearly isn't). I'm just saying it is being promoted abroad almost unlike any other country in the world and this distorts expectations. The point system also gives the illusion that you're an exceptional candidate and that your skills are needed urgently in Canada, which is not the experience of a lot of immigrants in the labour market.

[Frances Woolley]

Neil: "And sadly, the oversupply of educated workers who don't want to do manual work has led to an inversion of the wage gap, so while you're right that it's difficult to find interesting work without a degree, finding adequately paid work is no problem"

It's not as easy for women to get manual work, however(with some exceptions e.g. landscaping). This (along with lack of easy access to higher education for people in rural areas) may be one of the reason why white men are less likely than just about anyone else (white women, men from visible minority backgrounds) to go to university in Canada. Or it may be that there's a good chunk of boys who do about as well in school as SpongeBob does on his driving test (Here is a background report for an Australian commission examining boy's performance in school).

[Frances Woolley]

Neil, and manual work is non-tradable, so it can't be outsourced. Good reason to get into manual work.

[Patrick]

I suspect managers, especially lousy managers, prefer overqualified workers. It reduces the need for managers to actually know anything. Instead of leading they just need to be a cop.

[Andrew F]

Sorry Guillaume, I was referring to those journalism students. Your statement about their expectations not matching reality was ambiguous. Journalism is in a bit of a rough patch at the moment, so are their expectations too low?

[Andrew F]

Frances:

"Neil, and manual work is non-tradable, so it can't be outsourced. Good reason to get into manual work."

Well, it is tradable in the sense that two dozen Chinese peasants with shovels can be replaced with an American excavator. That tends to keep a cap on wages, at least until the supply shrinks.

[Determinant]

Ah Frances, you've stumbled onto the open secret of our immigration system.

So answer me this: if a number of graduates and immigrants are chasing a limited pool of jobs, is it rational to lower the number of immigrants we admit?

The problem is that if you answer yes, you risk being branded a racist xenophobe.

Furthermore with professional immigrants, the provinces control the regulators and the Feds control the immigration system. The two don't talk to each other, which is a deplorable lack of co-ordination.

[Neil]

Determinant - is it not also possible that we're simply admitting the wrong class of immigrant? If our problem is an oversupply of educated workers, not an overall oversupply of workers, then does it make sense to have a points-based system that favours higher education?

[Andrew F]

The 'immigrants take our jobs' argument totally fails to consider that while immigrants provide labour, they also consume. More concerning that professional immigrants are the ones that come here with intent to remit as much as possible to family elsewhere. That's basically importing foreign labour.

[Determinant]

Neil:

Possibly, but then our immigration would not be drawn from South-East Asia, India and Egypt as it is now, but Mexico, South and Central America. Under a labour-focused system, we'd likely place the highest priority on former illegal immigrants to the US. Think about it, people doing the same job with the same skills in a very similar society, but here they would have legal status. Those are the people we'd want.

However if you change the target pool, that is almost as politically dangerous as lowering the total intake. You alienate the existing immigrant/New Canadian community like Indo-Canadians.

Sikh leaders speak openly about the fact that many Sikhs hold a conservative social view but will vote Liberal purely on immigration issues. In inner 905 ridings immigration policy can make a difference in who takes the seat.

[Frances Woolley]

Andrew F - my point was not so much 'immigrants take our jobs' as 'many immigrants can't find jobs suited to their training/ability and then end up miserable/angry'. A good example of this is the suit filed against the BC Veterinarians Association by a group of Indo-Canadian vets alleging that the BCVA was discriminating against them by not allowing them to practice because they failed a language proficiency test (their claim was that the level of language proficiency required by the BCVA was greater than a vet needed to treat animals effectively). The BCVA won in court however.

Neil/Determinant - if not a points system, then what? The domestic workers program is, in many ways, a highly successful program in that immigrants are carefully selected, have jobs when they come here, and are quickly integrated into Canadian society. Should that program be a model for immigration policy?

But then there's the issues Guillaume raised earlier about the practical problems with employer sponsored programs.

Fundamentally, what is the reason why we have immigration in the first place? If we know what aims immigration programs are intended to achieve, then we can have an intelligent conversation about the best way of meeting those aims.

[Determinant]

Andrew F:

Sure immigrants consume, but the choice posited here is that given professional jobs N, with immigrants A and domestic grads B, where A+B is greater than N, some part of A+B will wind up unemployed or underemployed. In this case a professional job is necessary for full consumption. The question then becomes is it reasonable to favour immigrants over domestic grads and let the domestic grads suffer underemployment and underconsumption? What else are dashed dreams than personal reflections on underconsumption?

Consumption in this case is not directly relevant.

Frances:

The Domestic Workers program would be a start. Simply de-emphasizing professional degrees would also work. There is a large disconnect between the labour market and the immigration department.

I'm not entirely sure of the goals of our immigration program myself. The only one I can be sure of is to prevent Canada's net population from declining.

As I said, there is a large disconnect between the labour market and the immigration program. The provincially-directed barriers to professional employment are ridiculous and inefficient from all perspectives.

Many of my classmates at University who were from the 905 belt (I'm from the 705 myself) theorized that the goal of Canada's immigration program was to bring in as many people as possible and grant them citizenship quickly. The minimum requirement is 3 years of permanent residency status. This is of course a government policy, and the new citizen would therefore be grateful to the political that conducted such a policy.

Over time, this builds up a loyal base of voters who are grateful to one particular party or another. Immigration policy as a self-definition issue can be persuasive to new citizens. As a gift of the government that is profoundly personal and valuable, immigration is a powerful form of patronage.

[Andrew F]

Sorry Frances, that comment wasn't directed at you.

Determinant:

Consumption is relevant because it means there are more jobs to go around, ceteris paribus. It's not a given that each marginal immigrant yields one more unemployed Canadian, because the marginal consumption contributed by that immigrant employs other Canadians.

Now, is it clear that we have too many people in professional fields? They seem pretty well paid, mostly. Perhaps immigration is useful for keeping wages down in the professional class and improving income disparity. However, it is wrong to attract professionals here without giving them a ready path to practicing here. We're robbing other, often less wealthy countries of their professionals and putting them to no productive use here.

[Adam P]

Hello Frances,

I'm wondering about this point you make: "Canada, like many other countries, has expanded access to post-secondary education, but the demand for educated workers has not kept up to the supply. A study by Marc Frenette based on data from the 1980s and 1990s found over thirty percent of university graduates were over-qualified for their jobs. "

Is their anything in the data to say that the expanded access to post-secondary education has expanded the number of university graduates by roughly 30%?

Perhaps the extra graduates are the squidwards and they only ever got the idea that they're more talented than they really are because they were admitted to university when really they shouldn't have been.

I'm certainly not saying I think this is the case but I'd imagine you want to rule out the sort argument that says government intervention distorted the education outcome but the efficient labour market just ignored this and allocated labour as it anyway would have.

[Adam P]

Actually, on re-reading the post it seems that maybe you are exactly making the argument that government intervention distorted the education outcome but the efficient labour market just ignored this and allocated labour as it anyway would have.

And you point is that by giving these people the impression that they should get better jobs than they actually can we do them a disservice? Is that the point?

[Panayotis]

1. Reality is in the eyes of the beholder. So our expectations help shape reality. The occurrence or relatioship is non-monotonic to our expectations that shape the reality of the occurrence. This is how surprise is ever present.

2. Identification is important and Akerlof and Kranton have a point. Identification for my work is an effort to estimate and determine value for the identity seeker. This value is the criterion for aspiration which can differ from market value.
3. For ancient Greeks education had as its primary objective a public purpose to prepare better citizens and knowledge was a public good to be shared (mainly) and traded (secondarily). Glory is the value criterion used. This is why sophisists were held of low regard. If market identification of profession is the primary consideration there can be a conflict with public identification of values (honor) and esteem. This conflict is a source of alienation and the spread between aspiration and the real wage can lead in lower productivity.

[Frances Woolley]

Adam P - "And you point is that by giving these people the impression that they should get better jobs than they actually can we do them a disservice? Is that the point?" Yes, that's it.

[Adam P]

Ok, I see. Interesting point.

What confused before was that you go on to say that you want your own children to go to university, partly for the experience. This sounds like you want them to go regardless whether they "should" go (according to whatever was the original standard). Why would that not be doing them a disservice?

[Brian Finch]

Interesting ideas here.

I think this old video (4:22) of Viktor Frankl is apropos to this question:
http://www.ted.com/index.php/talks/viktor_frankl_youth_in_search_of_meaning.html

[Determinant]

Andrew F:

Ceteris Paribus doesn't apply here because things are not equal.

We have a pool of N jobs to fill. The alternative is a pool of lower-paying/dissatisfying jobs M with reduced consumption. Who goes down into that M pool? Why do we have an immigration system that brings in competition with existing grads whom taxpayers have spent considerable sums educating? This is a further inefficiency of our immigration system.

You are attempting to argue Say's Law and it's tripping up on the same thing that Say's Law always trips up on: money.

[Yohanna]

People like Michael Clemens and Lant Pritchett make the case that rich countries' immigration policies should focus on unskilled workers rather than skilled ones, that it would be of greater benefit to both rich and developing countries. And that was even before considering Frances' interesting argument related to work and identity.

Someone told me recently about her experience migrating to Canada 10 years ago. Her husband, an experienced policeman, had Canadian "contacts" and expected to be offered a job upon arrival. When told he'd have to go back to school (for 6 months) he refused the "humiliation" and became a successfull but bitter salesman. She decided to get a college diploma in her field (computer science), got a job and is a happy new Canadian. Clearly the Canadian immigration system should have done a better job at informing them of their job prospects in Canada. It would not be so difficult, when assessing people's application, to tell them roughly what will be required to find a similar job (ie going back to school, exams, 2 years of internship, whatever), so they can make an informed decision about migrating and manage their expectations.

[Phil]

since a university degree is, as pointed out above, broadly recognized as "the new high school diploma" in terms of it's job-obtaining potential, it seems like we need to diferentiate those who simply flub through their degrees from those who work hard and do well. At this point-unless you plan on going to grad school-there really isn't any incentive to work hard in school. In the end you'll be competing for the same job as someone who barely scraped by.
Perhaps this would seperate the potential leaders from workers, in a world where having an undergraduate degree is the status-quo.

[the_iron_troll]

In regards to the immigration/wages debate, I thought I should note that there is no definite answer. In fact, the data seems to show that immigrants create more jobs than they take.

http://yglesias.thinkprogress.org/2010/05/factcheck-on-immigration-and-wages/

Frances:

This was a fantastic post! And I can't help but wonder if I inspired it in some way. I wish I'd made time somehow to post on it two weeks back.

I don't know if I believe your basic thesis, though. I read mostly US-centric blogs, but the ones I have read have remarked that unemployment for high-skill positions in the US is even now around 3% or so, or what is I assume the churn rate. By contrast, medium-skill is a bit under the posted US unemployment rate (9.7% at the moment I believe), low-skill employment is north of 10%, and things look much worse for the young. That doesn't seem to indicate a glut of highly skilled labourers. It seems to indicate the exact opposite.

I can't help but think that there is an even deeper question here that we need to ask, just on the subset of identity addressed. Do we as a society accept that you should be able to get the job that you want? If you are highly trained, but your field is currently in low demand for some reason, should we as a society assist you?