On UBI Causing Inflation, Scientific Literacy, and University Endowments

Thoughts about UBI Undermining Itself via Inflation, Justifying STEM with Appeals to Scientific Literacy, and Regan Arntz-Gray's Defense of University Endowments

Scientific Literacy

One interesting response to my recent anti-STEM essay was that I overlooked the importance of widespread scientific literacy, presumably because people are overly circumspect about stuff like vaccines, climate change, GMOs, etc. I understand this temptation, but people’s derangement about those topics emanates from unhealthy political allegiances and it’s unclear that a little more science education could surmount those biases. Also, my understanding of, say, whether financial literacy improves financial decision-making or whether smarter people are less partisan is pretty discouraging, which isn’t exactly what’s at issue here, but it’s close enough to motivate skepticism about this reputed societal payout from more STEM education.

Plus, as I pointed out in my essay, many of the suggested converts to STEM might struggle to grasp the material anyway, and our education system rewards temporary retention of material rather than true understanding—we forget most of what we learn, especially given how surprisingly useless it is at work. So, even those capable of mentally digesting STEM won’t retain that much of it. STEM education’s failure to equip students with pragmatic skills isn’t just because the imparted knowledge is irrelevant—it’s also fleeting. So, it’s unclear how much increased STEM education is really bolstering scientific literacy. Even if greater science education reduced anti-scientific beliefs, I wonder if that effect would be from enhanced scientific understanding or merely from a predisposition towards conformity, or maybe it doesn’t matter.

I wouldn’t push back on more STEM instruction for K-12 (which I think has too little subject matter variety anyway) or the very basic scientific literacy you’d expect that to entail, but if you know any engineers, for example—well, they’re not renowned for their humility. So I’d actually worry that pumping out more STEM degrees, by giving people enough rope to hang themselves, could spawn an uptick in the most insufferable kind of epistemic hubris and do-your-own-research numskulls out there. We don't need a bunch of former STEM undergrads roaming the internet, thinking they’re

Emily Oster

or something, and digging through COVID data to decode things for themselves using their newfound “scientific literacy.”

Also, people don't really study or critique the research literature in undergraduate science programs—that kind of proficiency is a benefit of grad school, but encouraging people to obtain science PhDs so that we have a knowledgeable citizenry is basically a satire of our unchecked love affair with higher ed. And unless you’re evaluating the literature yourself, then you’re completely relying on others to formulate your beliefs (and even then you’re not the one conducting the research).

If “scientific literacy” means improving people’s judgment about which purportedly knowledgeable parties to believe, then that should be fostered. Ultimately, though, we should promote greater scientific humility more urgently than scientific literacy, and the very last thing we need is the mere impression of scientific literacy, and I fear that promoting STEM majors could risk precisely that.

I’m pro-science, but I’m not super invested in widespread, high-level science literacy. Modern civilization is entirely dependent on the human ability to hand off various epistemic duties to those with greater specialization and talent and pool our discoveries, and emphasizing scientific literacy isn’t nearly as important as discouraging pseudo-scientific buffoonery. We’ve come a long way from burning people at the stake for promoting heliocentrism, but that progress hasn’t been achieved through equipping everyday individuals with the skills and time to parse scientific findings independently with their decidedly average brains—it’s an outgrowth of respect for the scientific project rather than the result of everyone personally confirming its findings.

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University Endowments

I really appreciated Regan Arntz-Gray’s recent essay on university endowments since it's rare to find someone openly defending them. Further, Arntz-Gray has relevant professional expertise, so her writing was edifying, even if not totally persuasive. Despite the enlightening info, I still found myself either tangled up in confusion or witness to some kind of motte-and-bailey routine (or maybe both). Unfortunately, Arntz-Gray liberally intermixes the normative and positive aspects of the subject and sets out to justify endowments by outlining what they are:

To understand why, and more generally why colleges don’t use their endowment funds in the exact way outside commenters assume they should, you have to actually know what an endowment is! So, very simply, an endowment fund is a specially regulated pool of capital which exists to support an institution in serving its mission in perpetuity.

If her project were purely descriptive, then it’d be a sound (but also uncontroversial) effort: whether some particular expenditure is legally allowable or fits within how the cadre of people managing the endowment view their objectives are fairly banal topics. However, Arntz-Gray sometimes dips into supporting the more provocative (viz., normative) aspects of endowments, like whether they should be perpetual growth machines and universities’ persistent inability (read: refusal) to convert tumescent endowments into lower tuition. But her defenses smack of teleology and non-explanation. The justification that endowment apologists regularly present for retaining funds is that spending those funds would inhibit future growth of the endowment, which is plainly circular and, to be frank, drives me absolutely batty.

Someone in the comments suggested a comparison with the Four Percent Rule in personal finance (some people think that 5% is fine, and apparently the standard rate for universities is roughly 5% plus CPI), and I think that commenter is accurate: universities are managing endowments like they’re retirement funds, but this elides the question of whether that’s a justifiable and fitting approach to managing them. It’s not like universities have “retired.” Those rules are meant to prevent exhausting your personal finances in the absence of income. And I pointed out that this would be a hell of a lot more understandable if universities had ceased collecting donations from alumni or something, but they haven’t.

According to Arntz-Gray, universities justify their endowment management practices under the aegis of “intergenerational equity,” which I view as pretty ballsy, given historical tuition prices and everything. I asked her whether endowments have kept pace with inflation over the past several decades and how large they were in the 80s when tuition was much cheaper, and she replied that these are inappropriate questions because universities have received donations since then. Again, have universities promised to stop seeking/accepting donations?

Anyway, endowments are a minor personal bugbear, so encountering someone knowledgeable who’s sincerely defending them was like spotting an exotic bird that people thought to be extinct. Still, it’s tough to classify an essay as a slam dunk if its purported goal is to show that endowments are “absolutely nothing like a rainy-day fund” when it admits halfway down that “it can occasionally serve that purpose, within limits.” Thus, the post is instructive, but as a defense (rather than a description) of endowment behavior, particularly their inability to reduce tuition regardless of size and their perpetual growth mindset, it’s flawed. But finding something that’s even semi-apologetic about university endowments is unusual, so I still recommend reading it.

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UBI and Inflation

For some reason, a contingent of otherwise decently smart (but UBI-skeptical) people claim that UBI would be totally offset by its own inflationary effects, that it’s therefore self-canceling, and that this is persuasive reasoning against implementing UBI. This irks me. Even if it were true that UBI is destined by logical necessity to be some kind of economic nonevent, why should that inspire rabid opposition? You can’t both (1) vehemently dislike UBI because of its large redistributive effects and (2) think you have privately derived a logical proof that UBI wouldn’t have any redistributive effects. It’s self-undermining.

Furthermore, the underlying idea is economically confused. These people seemingly assume that UBI would be amount to something like “helicopter money,” or just tripling everyone’s bank account. And if you handed out money simultaneously to everyone in proportion to their pre-existing wealth, then I’d understand the expectation that inflationary effects would roughly cancel out the monetary influx over the long run, but no one’s suggesting that. UBI isn’t allocated pro rata in relation to existing wealth (which could indeed risk being somewhat pointless); UBI is allocated per capita and would more substantially (i.e., by percentage) increase the wealth of less wealthy people, so it’d probably be inflationary, but there’s still a redistribution effect.

Suppose society contains 1,000 people divided into two classes: class A comprises 500 people with a personal wealth of $100 each; class B comprises 500 people with just $10 each, so people in class A are 10x wealthier than those in class B. A UBI policy is enacted that prints $1,000 for each person and inflation ensues, and presume this doesn’t boost productivity or anything, so there’s a lot more money but the same number of goods to divide among the citizens through market interactions, but now members of class B have 1010/1100 (~92%) of the wealth of someone from class A (to devote towards acquiring that same bunch of goods). Thus, inflationary effects don’t prevent redistribution.¹

More obviously, if the UBI scheme is even partially funded by taxation, rather than merely writing checks, then the resemblance to helicopter-money scenarios begins fading pretty quickly. I’d expect a UBI-style policy to cause some inflation, but imagine giving some newly printed dollars to everyone, including people without any money at all—it’ll plainly improve their position from zero, even if those dollars aren’t worth much (i.e., slightly less than the dollars that they didn’t have any of before).

1. In case you’re curious, total nominal wealth increases by ~18x, class A nominal wealth increases by 11x and class B nominal wealth increases by 101x. Class A goes from owning ~91% of total wealth to owning ~52% of total wealth (meaning class B goes from owning ~9% of total wealth to owning ~48% of total wealth.