Drop in Total Value of U.S. Housing: Illustrating the Financial Crisis

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Faithful reader M.R. was looking through archives and found my first post of  May 17, 2011, on "Two ways of illustrating the financial crisis" and the follow-up post of August 3, 1011, on "Four More Ways of Illustrating the Financial Crisis." He writes:  "[M]y reason for this email is to differ over your 2 + 4 ways of illustrating the financial crisis.  To me the illustration is a graph I have never seen -- hint to one who knows the literature much better than I -- a graph of the market value of residential real estate." Here  are some illustrative graphs made with the ever-useful FRED website of the Federal Reserve Bank of St. Louis, all using data from the Federal Reserve's Flow of Funds accounts.
What is the drop in the total market value of residential real estate? Here's the data series on :"Real Estate - Assets - Balance Sheet of Households and Nonprofit Organizations." The drop is from a shade over $25 trillion in October 2006 to $18.2 trillion in October 2011. And yes, you do see a little upward wiggle at the right-hand end of the line, a rise to $18.6 trillion in the most recent data for January 2012.



For many households, of course, what matters is not the total value of your property, but how much equity you have in the property. For example, if the value of your house declined from $320,000 to $240,000, but  your outstanding mortgage is  $250,000, it's not all that comforting to notice that your home still has a positive market value overall. Here's the graph showing "Owner's Equity in Household Real Estate." Equity peaked at $13.5 trillion in January 2006, and dropped to $6.2 trillion in October 2011--a drop of more than half.



Both of these time series are in nominal dollars. In the next two graphs, I've divided them by nominal GDP, which has the effect of adjusting both for inflation and for real growth of the economy over time. First, here is the total value residential real estate divided by GDP.

Just to be clear, there is no reason why the share of housing compared to GDP should be a constant over time. Rising incomes will presumably cause people to consume more housing, but the pace at which total housing consumption rises could be faster or slower than the growth of the economy over time. If you squint at the figure and twist your head a bit, one can imagine that the total value of housing as a share of GDP is rising gradually over time, but with a lot of fluctuations. Clearly, the price spike in the mid-2000s was far outside the pattern of any such long-run historical trend.

The final graph is owner's equity in housing divided by GDP. It's interesting to observe that housing equity relative to GDP became a more important asset from the mid-1960s up through the late 1980s. A lot of the advice one used to hear about buying a house early in life was from people living through that experience. Through much of the 1990s, the ratio of owner's equity to GDP fell, but in the early 1990s, that was partly a result of depressed regional real estate markets in certain states in the aftermath of the collapse of many savings and loan institutions in the late 1980s and early 1990s (which made the numerator of the ratio decline), and also a result of fast economic growth from the mid-1990s on (which made the denominator of the ratio rise). Again, the bottom line is that the spike in the total value of housing that ended around 2006 is well outside the post-World War II historical experience. And the drop since 2006 takes this ratio from by far its highest value since 1950 to by far its lowest value since 1950.


Of course, the financial crisis itself is more than just drop of nearly $7 trillion in housing values. It's also about what forces created the housing bubble in the first place, and how the bursting of the bubble translated itself into weaknesses in the banking and financial system. But the rise and fall of housing values is a central part of what occurred.

The Death Penalty and Deterrence: Why No Clear Answers?

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A panel of the National Research Council headed by Daniel S. Nagin and John V. Pepper has published "Deterrence and the Death Penalty." The report can be ordered or a free PDF can be downloaded here. The report refers back to a 1978 NRC report which concluded that "available studies provide no useful evidence on the deterrent effect of capital punishment." The latest study reaches the same conclusion.

"The committee concludes that research to date on the effect of capital punishment on homicide is not informative about whether capital punishment decreases, increases, or has no effect on homicide rates. Therefore, the committee recommends that these studies not be used to inform deliberations requiring judgments about the effect of the death penalty on homicide. Consequently, claims that research demonstrates that capital punishment decreases or increases the homicide rate by a specified amount or has no effect on the homicide rate should not influence policy judgments about capital punishment."

Why has the research found it so hard to sort out cause and effect in this situation? The NRC report emphasizes two reasons, but discusses a number of others:

1) One problem is that deciding on the effect of capital punishment requires saying, "Compared to what?" But existing studies don't pay enough attention to what the alternative punishment might have been. Here the NRC report: "Properly understood, the relevant question about the deterrent effect of
capital punishment is the differential or marginal deterrent effect of execution over the deterrent effect of other available or commonly used penalties, specifically, a lengthy prison sentence or one of life without the possibility of parole. One major deficiency in all the existing studies is that none specify the noncapital sanction components of the sanction regime for the punishment of homicide."

2) Another problem is that studies of the deterrent effect of capital punishment need to make some assumptions about how potential murderers perceive that penalty. Are they aware of how often it is imposed, and under what circumstance, and their actual chances of receiving the penalty? In many studies, these underlying assumptions are not spelled out clearly, or even at all.


3) There's a classic cause-and-effect problem in studying the deterrent effects of any criminal penalty, whether fines or imprisonment or capital punishment. Say that there is one jurisdiction where lots of crimes occur and another where not many crimes occur, for whatever reason. The first jurisdiction thus imposes lots of criminal penalties, and the other jurisdiction doesn't. In this situation, a naive statistical test will observe that high level of crime are correlated with high levels of penalties, and low levels of crime are correlated with low levels of penalties. But it would be foolish to argue that the levels of penalties are causing the levels of crime. Instead, one needs to figure out how increases or decreases in the level of penalties would affect levels of crime, which is a much harder question, especially because changes in penalties often occur as a reaction to levels of crime.

4) The statistical problem here is a difficult one. To help illustrate why, here's a graph of the number of death sentences and executions in the U.S. since 1974. Back in 1976, U.S. Supreme Court decisions had made nearly impossible for states to execute anyone, and the number of death penalty sentences was somewhat lower as well. Then the number of death penalty sentences rises, and a few years later the number of executions rises. In the last decade or so, the number of death sentences had dropped substantially, but the number of executions has dropped by less, surely because of that large number of death sentences originally given back on the 1980s and 1990. Referring back to the earlier point, an obvious question here is the extent to which potential murderers are aware of these patterns in sentencing and executions.  

Next, here's a graph of homicide rates since 1974. Notice that it starts off at about 10 per 100,000 population, and then starting around 1990 drops off to about half that level. In other words, about a decade after capital punishment sentences rise, and at about the same time as the execution rate starts to rise, the homicide rate drops off. A naive statistical comparison between these patterns using national data might well suggest that higher levels of executions preceded a drop-off in murders.

But of course the deal penalty is not equally likely across states. New York state sentenced only 10 people to death from 1973-2009, and executed none during that time. California and Texas both sentences large numbers of people to death, but California actually carried out only 13 people from 1976-2009, while Texas executed 447 people. However, these differences in death sentences and actual executions seem to have very little effect on the murder rate in these three states, which essentially follows the national pattern in all three cases.


Of course, researchers in this area are fully aware of these difficulties in looking at the data over time and across states, and have applied a wide array of methods to this data. Given these issues, it is perhaps no surprise that the NRC report lists studies in the last decade which find that each execution deters five other murders, or 18 other murders, as well as studies that find that capital punishment deters no murders at all, and studies that find that the conclusions one draws from the data are quite fragile, depending on small differences in the statistical tests that are run. 


Of course, the issue of whether capital punishment deters is not the only issue in making policy choices about capital punishment. The NRC report is careful to point out that it is not considering the moral arguments for or against capital punishment, nor is it looking at the arguments over whether the penalty is administered in a consistent or nondiscriminatory fashion. Personally, my own moral sense would not rule out the concept of the death penalty for the most extreme and egregious cases of murder. I do worry that its application seems to vary so greatly across jurisdictions, and across racial groups, and by the quality of the lawyers involved in the case. I also worry that in a world without capital punishment, those who have already committed crimes that could land them in prison for life (say, kidnapping) have an incentive to kill potential witnesses, because in a situation without capital punishment, there is no additional penalty for doing so. 

The NRC report is careful to point out several times that a lack of solid empirical support for whether capital punishment deters doesn't prove that such an deterrent effect does not in fact exist. As the old saying among empirical researchers goes: "Absence of evidence is not evidence of absence."


On the particular issue of the uncertainty of whether or how much capital punishment deters future murders, I struggle with a conundrum that was put to me many years ago. Take as a starting point that we aren't sure whether capital punishment deters or not, and we must make a choice whether to execute certain murderers or not. Then consider four possibilities: 1) we execute some murderers and it does deter others, so we save innocent lives; 2) we execute some murderers and it doesn't deter others; 3) we don't execute any murderers and it wouldn't have deterred anyone if we did; and 4) we don't execute any murderers but it would have deterred some future murderers if we had done so. Those who worry about executing those who don't really deserve such a grave punishment, or even who may be innocent, have a point. But if it's possible that capital punishment may deter, and we genuinely aren't sure, then we also need to take into account in our policy calculations the possibility that executing the most egregious murderers might save innocent lives.
 

World Energy in Three Graphs

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The BP Statistical Review of  World Energy is out for 2012. It's always a good reference for basic quantity and price data. Here are three graphs that caught my eye, and a few thoughts.

As a starting point, here's a figure showing world consumption of energy by source going back 25 years to 1986. The comment under the table reads: "World primary energy consumption grew by 2.5% in 2011, less than half the growth rate experienced in 2010 but close to the historical average. Growth decelerated for all regions and for all fuels. Oil remains the world’s leading fuel, accounting for 33.1% of global energy consumption, but this figure is the lowest share on record. Coal’s market share of 30.3% was the highest since 1969."



The sources of energy on the figure from bottom to top are green for oil, red for natural gas, light orange for nuclear, blue for hydroelectricity, dark orange for renewables, and gray for coal. It's true that the "renewables" slice has grown over time, from nearly imperceptible to actually visible. But it's useful to bear in mind that despite all the publicity about solar, wind, biofuels, and other renewable resources, they remain tiny compared with the other energy sources--especially the big three of oil, natural gas and coal. Even if public policies less favorable to fossil fuels were enacted worldwide, like a meaningful carbon tax, and even if technological progress in renewables continues to ramp up at a rapid pace, realistically speaking the big three fossil fuels will dominate world energy production for the next few decades.

The share of oil in world energy consumption is the lowest on record, BP reports. Part of the reason is the price. Here's a figure showing the long-term price of oil going back 150 years to 1861. The dark green line shows oil prices in nominal dollars; the light green line shows oil prices in real inflation-adjusted dollars. It's striking that after the Pennsylvania oil boom of the 1860s, real oil prices dropped to historically low levels and pretty much stayed there from 1880 up to the early 1970s--nearly a century of relatively cheap oil. Since then, crude oil prices have been seen two enormous spikes: one in the 1970s and one in the last few years. Both spikes took real prices of crude oil roughly back to where they were in 1860, before the era of cheap oil began. 

Oil is produced, shipped and sold in a global market. Natural gas is tougher to ship all around the world, unless or until there is a very large investment in the pipelines and ships that could make it possible. As a result, natural gas prices are falling in the U.S in the last few years (red line on the graph) while rising in places like Germany, the UK, and Japan.


 Of course, the fall in U.S. natural gas prices is largely due to the rise in unconventional natural gas production. I posted on June 7, 2012, about "Unconventional Natural Gas and Environmental Issues." My own grand compromise proposal for U.S. energy policy is the "Drill Baby Carbon Tax" -- basically push ahead with domestic production of fossil fuels, with environmental safeguards in place, but at the same time impose a carbon or pollutant tax to encourage the transition to increased energy conservation and to less-polluting sources of energy. 

Health Care at 20% of GDP?

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Back in the late 1970s and early 1980s, when I was first getting my feet wet in the arguments over health care finance, it was common to point out that national health care spending had risen from 5.5.-6.0% of GDP in the early 1960s to 9.2% of  GDP by 1980. Surely, we argued, such an increase couldn't continue. By 1993, early in the Clinton administration, when proposals for reforming health care finance were in the air, health care spending had reached an extraordinarily high 13.8% of GDP. Surely it was close to topping out?!? But by 2009, when the Obama administration's health care reform package was announced, national health care spending had reached an unbelievably high 17.8% of GDP.  

After several decades of watching U.S. health care spending climb higher than I would have believed plausible, I suppose I should be inured to the trend. But I still found my eyes bulging at the most recent official projections that health care spending will hit 19.6% of GDP by 2021. The estimates are from a team of actuaries from the Centers for Medicare and Medicaid Services, led by senior economist Sean P. Keehan, and they appear in "National Health Expenditure Projections: Modest Annual Growth Until Coverage Expands And Economic Growth Accelerates" in the July 2012 issue of Health Affairs. 

The actuaries project relatively slow growth in health care spending through 2013, due to the " sustained effects of the recent recession and modest recovery on projected growth in disposable personal income, insurance coverage,and unemployment rates ..." But as the economy recovers, demand for health insurance and health care will pick up again. Also, "[b]eginning in 2014, major coverage expansions from the Affordable Care Act will take effect. These expansions are expected to increase the number of people with health insurance; the demand for health care (particularly prescription drugs and physician care); and the share of total health spending sponsored by federal, state, and local governments." 

Here are a few highlights from the much more detailed and lengthy tables. First, here is total health care spending, per capita health care spending, and health care spending as a share of GDP projected for 2021.

 And here are a few bits from a more detailed table in which total health care spending is divided up into who pays the bills: private business (through private health insurance), households (through private health insurance premiums and out-of-pocket spending) and government (including federal, state and local government, both government programs that provide health insurance to citizens as well as health insurance for government employees). The government share of health care spending was 46% in 2011, and is projected to be 49.6% of GDP in 2021. 

This is a "current law" projection of costs, so it assumes that various methods to control costs will be imposed and work as they are currently written into law. In turn, this means that the cost estimates are more likely biased low than high. With only a bit of rounding, we seem headed for health care spending levels that I wouldn't have believed back in the late 1970s, and can barely believe now: total health care spending at 20% of GDP, with government paying half the bills.

 

 

The Average Child at $243,900

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Mark Lino of the U.S. Department of Agriculture has authored this year's version of Expenditures on Children by Families, 2011, a report going back to 1960. This year's version uses data from the Consumer Expenditure Survey of 2005-06 on what people buy, and then the prices adjusted to their 2011 levels. My wife and I have three little bundles of joy--actually, they are rapidly metamorphosing into lanky adolescent bundles of joy--so this report always catches my eye. The headline finding, I suppose, is that average lifetime expenditures by a husband-wife family on a child were $234,900 in 2011.

Here is annual spending per child by household income level and by age of the child--more specifically, for the younger child in a family with two parent and two children. Spending per child for each age group is more twice as high in the higher as opposed to the lower income group.

The primary expense is housing, but health care is also important. Over time, the actual cost of feeding and clothing children has become less important, while the out-of-pocket costs of child care and education have become more important.


The costs of raising a child are rising over time, but the total size of the increase may be less important than the specific drivers behind the rise. Here's Lino on the cost differences from 1960 to 2011 in raising a child (references to figures omitted):

"In 1960, average expenditures on a child in a middle-income, husband-wife family amounted to $25,229, or $191,723 in 2011 dollars. By 2011, these estimated expenditures climbed 23 percent in real terms to $234,900 ... Housing was the largest expense on a child in both time periods and increased in real terms over this time. Food was also one of the largest expenses in both time periods, but decreased in real terms. Changes in agriculture over the past 50 years have resulted in family food budgets being a lower percentage of household income. Transportation expenses on a child increased slightly in real terms from 1960 to 2011."

"Clothing and miscellaneous expenses on a child decreased as a percentage of total child-rearing expenses and in real terms from 1960 to 2011. Reduced real expenses on children’s clothing is somewhat of a surprise given the popularity of many designer clothing items today; however, it is likely that technological changes and globalization have made clothing less expensive in real terms. ..."

"Health care expenses on a child doubled as a percentage of total child-rearing costs, as well as increasing in real terms, from 1960 to 2011. ...  Perhaps the most striking change in child-rearing expenses over time relates to child care and education expenses. It should be noted that in 1960, child care/education expenses included families with and without the expense. Even so, these expenses grew from 2 percent of total child-rearing expenditures in 1960 (for families with and without the expense) to 18 percent (for families with the expense) in 2011. Much of this growth is likely related to child care. In 1960, child care costs were negligible, mainly consisting of in-the-home babysitting. Since then, the labor force participation of women has greatly increased, leading to the need for more child care. Child-rearing expense estimates were not provided for single-parent families in 1960, likely because of the small percentage of children residing in such households at the time."

When I contemplate the costs of child-raising, I sometimes remember a bit of good cheer I once heard from a financial planner: Those who have children often feel much better about their standard of living in retirement. Those without children experience retirement as a time when their income has diminished, but their desired expenditures are the same or higher. But for those of us with children, retirement will be a time when our income has diminished but our expenditures--when we are no longer supporting children--will also be much lower. Just one more blessing of parenthood!

Interview with Gary Becker on Rationality

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Catherine Herfeld has an interview with Gary Becker in the Spring 2012 issue of the Erasmus Journal for Philosophy and Economics. It's called "The potentials and limitations of rational choice theory: an interview with Gary Becker." I found it in a post from Peter Klein at the "Organization and Markets" blog. Herfeld tries to push Becker on the limitations of rational choice theory and whether economists should be considering alternatives like behavioral economics, and Becker pushed back. Here are a few excerpts:


Becker on behavioral economics and the financial crisis

"But did the behavioral economists predict the crisis any better? When taking a look at the literature, one does not find better results. ... In terms of understanding the crisis, I do not think that more realistic behavioral assumptions would solve the problem. ...  In fact, I do not think that behavioral economics is a revolution. However, it has added some insights into human behavior and those insights, to the extent that they are verifiable, will be absorbed into the rational choice model. They will not lead to a radical change of the model. The real issues are how important are those insights and where do they apply?"

"So, for example, the explanation that consumers were somehow misled in the credit market, and that this in turn contributed to the financial crisis: I think there is very little empirical support for that. A lot of consumers were making pretty rational decisions, even those who were taking out mortgages with low interest rates and low down payments. Maybe they were going to default. But they did not default on their own capital. They defaulted on the lender’s capital. So I see very little evidence from this that consumers are not rational, in the sense that the rational choice model cannot explain most of what they did."

Becker on the use of mathematics in economics

"There is a lot of critique against mathematics in economics, from non-economists, from Austrian economists and from other groups, and I think it is misplaced. Mathematics can be a very useful servant; when it becomes the master, we are not in a good situation. However, I do not think it has become a master in economics. I think we made mistakes in understanding how economies move forward, even in understanding the pricing of derivatives. But one can make these mistakes, and plenty of mistakes have been made, without using any mathematics. Sociologists make a lot of mistakes without using mathematics. So I do not think that the problem is the use of mathematics per se. ... If we did it all verbally, would that improve our science? Economics was a verbal science until the 1940s and I would say we are now doing much better than the economists back then."

Becker on "takes a theory to beat a theory"

"If you want to abandon rational choice theory altogether, you have to substitute it with a new framework, and I do not see any new framework available at the moment—neither in the behavioral economics literature nor anywhere else—that has comparable explanatory and predictive power. That is the test. It is an old saying that you need a theory to beat a theory. That does not mean that you cannot extend the existing theory or modify it—you can and you should. As we learn more, we will modify rational choice theory. Maybe fifty years from now it will not be like rational choice theory anymore, because by then it will have been modified and changed in so many ways. That is how things evolve."

Becker on  how economics looks at aggregates and market relations, not at particular individuals

"Economists can make use of individual data panels and other data based on observations about the individual. However, what we are interested in are aggregates and market relations. For example, if the political aim is to subsidize education, economists do not care about how you respond or I respond in particular. Maybe there are differences in how Germans respond or Americans respond, or how people who study at the University of Chicago respond in comparison to how students from Columbia University respond, and I guess that we would care about that. But not about how the individual responds. In my opinion, this is a fundamental difference between psychology and economics."

Certificates: An Alternative to College?

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The number of people with job market certificates as their highest level of education has risen from 2% in 1984 to 12% by 2009. The number of certificates awarded has risen eight-fold in the last 30 years. What's going on here? Anthony P. Carnevale, Stephen J. Rose, Andrew R. Hanson tell the story and discuss the evidence in "Certificates: Gateway To Gainful Employment and College Degrees," a June 2012 report from the Georgetown University Center on Labor and the Workforce.


Defining certificates

"Certificates are often confused with industry-based certifications, like a Microsoft or Cisco certification, for example. The essential difference between a certificate and an industry-based certification is that the certificates are earned through seat time in a classroom and industry-based certifications are awarded based on performance on a test, irrespective of where the learning occurs. Certificates more closely resemble degrees: They are awarded mainly by public, two-year schools or private, for-profit, non-degree granting business, vocational, technical, and trade schools. Certificates are typically classified by length of program: the amount of time a program is designed to be completed in, typically for students who are enrolled on a full-time basis. Short-term certificates take less than a year; medium-term certificates take between one and two years to complete; long-term certificates take between two and four years. Short-term certificates are most common, accounting for 54 percent in the most recently available data. Medium-term certificates account for 41 percent of certificates, while the remaining 5 percent are long-term certificates."

What fields do certificates cover?
Some of the most common areas for certification are health care, business and office management, computer and information services, auto mechanics, construction, metalworking, and electronics. As the table below shows, many of these certificate fields are dominated by either men or women.





Certificate holders tend to come from lower-income households and lower education levels, and to get their certificate at a young age.

About 44% of certificate-holders earned their certificate before the age of 22; 66% earned it before age 29. But this does leave one-third who earned the certificate in their 30s and 40s and older, often as a way of brushing up their job market credentials.Certificate holders tend to come from households with lower income levels, although the gap isn't as large as I might have guessed. For example, for those from a three-person household with less than $34,000 in income, about 18% have a certificate; for those from households with more than $102,000 in income, 10% have a certificate. About 34% of certificate-holders have a college degree. 40% have only a high school degree--or didn't finish a high school degree.

Tennesssee is a leading example of a state with a focus on certificate programs.

"TTC is known for its high completion rates and high placement rates in high skill, high wage jobs. Over 70 percent of students complete their program of study, compared to just 13 percent at the state’s community colleges. Graduates are placed in field at an 83 percent rate and 95 percent of students pass certification exams on the first attempt."

"What stands out about TTC are its unique program structure, learning model, and support services. Students have one or two instructors over the course of their program and have an average of six hours of face time per day with those instructors. Students’ advancement through the program is based on mastery of skills rather than completion of individual course requirements. Students’ choices are significantly constrained; their only decisions are their program of study, whether they attend on a full- or part-time basis, and whether they attend during the day or evening."

"Remedial coursework, which often bogs down community college students, is replaced by a Technology Foundations course that all students are required to take. Students’ learning is largely self-paced. TTC buildings are designed with a focus on hands-on learning, with few traditional classrooms and more “lab” space. Employers of TTC graduates report that the quality of their work is similar to others with two to three years of work experience. In addition, TTC’s faculty, staff, and administration are all part of the support services offered to students. TTC reports the support system is critical to the success of students from low-income communities."

Certificates seem to boost earnings for those with lower skill levels, but there are complexities.

The report notes: "The median worker with a high school diploma earns slightly more than $29,000, while certificate holders earn slightly less than $35,000, meaning that the certificate premium over high school is 20 percent." This comparison includes only those for whom a certificate is their highest degree.

One difficulty with all such comparisons of course, is that those who get certificates may have more persistence or drive than those with similar education who don't. It may not be the certificate per se that helps them earn more money, but rather their extra persistence and drive. On the other side, the reports from Tennessee that those with certificates are similar to those with 2-3 years work experience suggests that the certificates are offering a real boost in skill levels, and thus helping some workers open a door to the labor market that they might not otherwise be able to achieve.

Another difficulty is that the amount by which a certificate improves earnings varies with many factors.  Certificates in health care, cosmetology, and food service often don't seem to increase pay by much. Other certificates like "police and protective services, computer and information services, agriculture, and business and office management offer large earnings premiums." Certificates have a bigger effect in some states than in others--perhaps reflecting differences in what is needed to get a certificate in different states, or in the average pay levels in different states.

Yet another concern is that any boost in pay from such certificates needs to be weighed against the cost, which can vary a lot. "The costs of attending public two-year schools are much less than private schools: less than $7,000 annually at public schools, $15,000 annually at private nonprofits, and almost $20,000 annually at private for-profits."

Finally, certificates may offer a earnings boost for those with lower levels of skill, but not for those with higher levels of skill. "Certificates are a high achievement for low-skilled adults, but a low achievement for high-skilled adults."

Certificates may have a role to play in helping the transition from school to jobs, especially for those with lower skill levels.

One theme that I seem to touch on every few months is that it is highly unlikely that the U.S. is going to dramatically expand the number of people attending college--at least college in its current form, which is quite costly. We need to be thinking about other ways to smooth the transition from high school to work for those who, whether by skills or interests or inclinations, aren't going to flourish in a college setting. Certificates can play a role here. Here's some of the conclusion from Carnevale, Rose, and Hanson"

"In an American economy where the advancement of technology and globalization means that a
high school diploma alone is no longer able to provide family-sustaining earnings to many, certificates represent one piece of a multi-pronged solution on the road to a workforce with 60 percent postsecondary attainment. Though certificates currently aren’t counted in many measures
of postsecondary attainment, often they provide the outcomes that degree-seeking students
are looking for: gainful employment. Certificates can also serve as the first rung on the ladder
to a college degree or as training for workers with degrees who are engaged in the process of
lifelong learning and career advancement. The rapid growth of certificates over the past 30 years
is a promising signal that students and institutions are recognizing the value of certificates at an
increasing rate. The main lesson from the available data on certificates is this: They are diverse. While it is important to look at the value of certificates in the aggregate, their diversity in purpose and value means that transparency is absolutely essential. By and large, certificates work, but they do
not work for everyone."


I posted on January 16, 2012, about "Certificate Programs for Labor Market Skills." For some other alternatives to the standard college degree, I posted last October 18 on "Apprenticeships for the U.S. Economy" and last November 3 on "Recognizing Non-formal and Informal Learning."