Authors: Erik Brynjolfsson,Andrew McAfee
The first and most obvious one is that MOOCs enable low-cost replication of the best teachers, content, and methods. Just as we can all listen to the best pop singer or cellist in the world today, students will soon have access to the most exciting geology demonstrations, the most insightful explanations of Renaissance art, and the most effective exercises for learning statistical techniques. In many cases, we can expect to see schools ‘flip the classroom’ by having students listen to lectures at home and work through traditional ‘homework’—exercises, problem sets, and writing assignments—in school, where peers, teachers, and coaches are available to help them.
The second, subtler benefit from the digitization of education is ultimately more important. Digital education creates an enormous stream of data that makes it possible to give feedback to both teacher and student. Educators can run controlled experiments on teaching methods and adopt a culture of continuous improvement. For instance, one course taught via MITx (MIT’s online education initiative) recorded all 230 million times that someone clicked on course materials, and analyzed over 100,000 comments on class discussion boards.
5
The head of MITx, Anant Agarwal, says that he was surprised when the data revealed that half of his students started working on their homework assignments before watching the video lectures. Students were more motivated to really understand the content of the lecture once they saw the specific challenges that they would learn how to overcome.
The real impact of MOOCs is mostly ahead of us, in scaling up the reach of the best teachers, in devising methods to increase the overall level of instruction, and in measuring and finding ways to accelerate student improvement. For millennia teaching methods have remained relatively unchanged: a lone lecturer stands in front of students, working with chalk and slate to illustrate ideas. Our generation is poised to use digitization and analytics to offer a host of improvements. As our friend the technology researcher and professor Venkat Venkatraman put it, “We need digital models of learning and teaching. Not just a technology overlay on old modes of teaching and learning.”
*
We can’t predict exactly which methods will be invented and which will catch on, but we do see a clear path for enormous progress. The enthusiasm and optimism in this space is infectious. Given the plethora of new technologies and techniques that are now being explored, it’s a certainty that some of them—in fact, we think many of them—will be significant improvements over current approaches to teaching and learning.
A GRAND BARGAIN: HIGHER TEACHER SALARIES AND MORE ACCOUNTABILITY
If there’s one consistent finding from educational research, it’s that teachers matter. In fact, the impact of a good teacher can be huge. Economists Raj Chetty, John Friedman, and Jonah Rockoff, in a study of 2.5 million American schoolchildren, found that students assigned to better teachers (as measured by their impact on previous students’ test scores) earned more as adults, were more likely to attend college, and were less likely to have children as teenagers. They also found that the differences between poor and average teachers can be as important as the ones between average and superior teachers. As they write, “Replacing a [bottom 5 percent] teacher with an average teacher would increase the present value of students’ lifetime income by more than $250,000 for the average classroom in our sample.”
6
It seems sensible, then, for educational reforms in the United States to include renewed efforts to attract and retain well-qualified people in the teaching profession, and to remove or retrain consistent low performers.
Part of the bargain should also be longer school hours, longer school years, more after-school activities and more opportunities for preschool education. Studies of successful charter schools by Harvard economist Roland Fryer and others have found that the formula for success is simple, if not easy: longer hours, additional school days, and a no-excuses philosophy that tests students and, implicitly, their teachers.
7
This approach has helped Singapore and South Korea do well in the PISA rankings—both rely heavily on standardized tests for children of all ages.
8
Lengthening the school year may be especially beneficial for poor kids, since research suggests that rich and poor children learn at a similar rate when school is in session, but that poor children fall behind over the summer when they are not in school.
9
However, one risk of testing is that it can encourage teaching to the test at the expense of other types of learning. We don’t necessarily think teaching to the test is always a bad thing, at least for skills that really can be taught and tested, including many basic capabilities that are needed in a global, information-based economy. But it’s also important to recognize that hard-to-measure skills like creativity and unstructured problem solving are increasingly important as machines handle more routine work. MIT’s Bengt Holmstrom and Stanford’s Paul Milgrom did pioneering work showing that strong incentives for achieving measurable goals can crowd out hard-to-measure goals.
10
A clever solution they suggest is via job design and task allocation. Give one group of teachers responsibility for the most measurable goals, while reserving ample time and resources for teachers focusing on the less measurable types of learning, protecting it from being crowded out. In principle, this can achieve the best of both worlds.
We have little doubt that improving education will boost the bounty by providing more of the complementary skills our economy needs to make effective use of new technologies. We’re also hopeful that it can help reduce the spread, especially insofar as it’s caused by skill-biased technical change. That’s largely a matter of supply and demand. Reducing the supply of unskilled workers will relieve some of the downward pressure on their wages, while increasing the supply of educated workers diminishes the shortages in those areas. We also think creativity can be fostered by the right educational settings, boosting the prospects not only of the students but also society as a whole.
But we’re also realistic about how new educational technologies are being used in practice. Highly motivated self-starters are the ones who take the greatest advantage of the abundance of online educational resources now available. We know twelve- and fourteen-year-olds who are taking college courses to which they previously would never have had access. Meanwhile, their peers don’t participate. Consequently what had been a small gap in their knowledge has become a much larger one. The lesson here is that unless we make real efforts to broaden its impact, the digitization of education won’t automatically reduce the spread.
2. Restart Startups
We champion entrepreneurship, but not because we think everyone can or should start a company. Instead, it’s because entrepreneurship is the best way to create jobs and opportunity. As old tasks get automated away, along with demand for their corresponding skills, the economy must invent new jobs and industries. Ambitious entrepreneurs are best at this, not well-meaning government leaders or visionary academics. Thomas Edison, Henry Ford, Bill Gates, and many others created new industries that more than replaced the work that was eliminated as farming jobs vanished over the decades. The current transformation of the economy creates an equally large opportunity.
Entrepreneurship has been an important part of the Econ 101 playbook at least since economist Joseph Schumpeter’s landmark work, written in the middle of the twentieth century, on the nature of capitalism and innovation. Schumpeter put forward our favorite definition of innovation—“the market introduction of a technical or organisational novelty, not just its invention”—and, like us, believed that it was an essentially recombinant process, “the carrying out of new combinations.”
11
He also argued that innovation was less likely to take place in incumbent companies than in the upstarts that were trying to displace them. As he wrote in
The Theory of Economic Development
, “New combinations are, as a rule, embodied . . . in firms which generally do not arise out of the old ones. . . . It is not the owner of a stage coach who builds railways.”
12
Entrepreneurship, then, is an innovation engine. It’s also a prime source of job growth. In America, in fact, it appears to be the only thing that’s creating jobs. In a study published in 2010, Tim Kane of the Kauffman Foundation used Census Bureau data to divide all U.S. companies into two categories: brand-new startups and existing firms (those that had been around for at least a year). He found that for all but seven years between 1977 and 2005, existing firms as a group were net job destroyers, losing an average of approximately one million jobs annually.
13
Startups, in sharp contrast, created on average a net three million jobs per year.
Subsequent work by John Haltiwanger, Henry Hyatt, and their colleagues confirmed that net job creation is much higher at young companies even though wages are lower.
14
Their research also suggests that startups are responsible for a disproportionate amount of ‘worker churn.’ This sounds like an unpleasant phenomenon, but it’s not; it’s mainly workers moving laterally between jobs in search of better opportunities. ‘Churn’ is an important activity in a healthy economy, but it tends to decrease sharply during recessions, when people become more reluctant to leave their jobs. The group found that young companies increased their share of total churn during the Great Recession and its aftermath, implying that startups provided a much-needed source of transfer opportunities for workers during a difficult period.
America’s entrepreneurial environment remains the envy of the rest of the world, but there is troubling evidence that it is becoming less fertile over time. Kauffman Foundation research conducted by economist Robert Fairlie found that while the rate of new business formation rose between 1996 and 2011, most of these startups had a single employee: the founder.
15
This type of entrepreneurship actually increased during the Great Recession, indicating that some entrepreneurs are probably people going into business by themselves after they’ve lost their jobs. Meanwhile, between 1996 and 2011, the birth rate of ‘employer establishments’—companies that employ more than one person at startup—declined by more than 20 percent.
It’s not entirely clear what’s behind this decline, but the climate facing would-be immigrants might be one factor. In 2012, entrepreneur Vivek Wadhwa and political scientist AnnaLee Saxenian, along with Francis Siciliano, revisited the earlier research they had done on immigrant entrepreneurship. They found that “for the first time in decades, the growth rate of immigrant-founded companies has stagnated, if not declined. In comparison with previous decades of increasing immigrant-led entrepreneurism, the last seven years has witnessed a flattening out of this trend.”
16
The change was especially pronounced in Silicon Valley, where over half of companies founded from 1995 to 2005 had at least one immigrant founder. Between 2006 and 2012, that percentage dropped almost ten points, to 43.9 percent.
Another commonly cited culprit behind depressed entrepreneurship is excessive regulation. Innovation researcher Michael Mandel has pointed out that any single regulation might not do much to deter new business formation, but each one is like another pebble in a stream. Their cumulative effect can be increasingly damaging as opportunities to work around them are diminished. There’s pretty good evidence that such ‘regulatory thickets’ are in fact impeding new business formation. For instance, economists Leora Klapper, Luc Laeven, and Raghuram Rajan found that higher levels of regulation reduce startup activity.
17
Their research was conducted using European data, but it seems likely that its conclusions are at least in part applicable to the United States as well.
We favor reducing unnecessary, redundant, and overly burdensome regulation, but recognize that this is likely to be slow and difficult work. First, regulators rarely like giving up authority once it’s granted to them. Second, those companies and industries protected by existing regulations will no doubt lobby strenuously to preserve their privileged positions. And third, separate sets of regulations exist at the federal, state, and municipal levels in America, so comprehensive change cannot be brought about by any single entity. The country’s Constitution is clear that most powers related to commerce rest with the individual states, so prospective entrepreneurs can likely expect to face a continued patchwork of regulations in many areas. Still, we believe that it is important to try to reduce the regulatory burden and make the business environment as welcoming as possible for entrepreneurs.
We don’t expect anyone to duplicate Silicon Valley, but we do think government, businesses, and individuals can do more to fuel high-growth entrepreneurship. An intriguing example is the work that Steve Case and the Kauffman Foundation are doing with the Startup America Partnership. It seeks to support over thirty entrepreneur-led startup regions, complete with a ‘dating site’ to make it easier for new ventures to partner with Fortune 500 firms that can complement their innovations with marketing, manufacturing, or distribution networks.
3. Make More Matches
Although job sites like Monster.com and Aftercollege.com and networking sites like LinkedIn have made it easier for employers and employees to find one another, the vast majority of our students that graduate each year still rely primarily on word of mouth recommendations from friends, relatives, and, yes, professors, to make introductions. We must find ways to reduce the friction and search costs that make it unnecessarily difficult to match people with jobs.
LinkedIn is developing a real-time database that describes the skills sought by companies and matches those skills with the training that students and other potential employees have. Sometimes simply rewording a few concepts on a resume can make the difference: companies looking for app developers for Android phones, for example, may not realize that a software development class on a student’s resume used that operating system.