The IEA, the gender pay gap and “economics education”

Yesterday I tweeted about the IEA’s schools programme: “This is the part that really needs to stop. 35,000 students per year polluted with the IEA’s ‘ideas’”. Kate Andrews tweeted in response that I was arguing for debate to be shut down, for students to be “shielded from a variety of arguments” and that I want to “ban the books” and “silence the ideas”. Many of her followers echoed her remarks.

This is incorrect. Students should be able to hear all sides of an academic debate. A teacher’s role is to help students identify and locate relevant evidence, ideas and opinions, and guide them in developing the intellectual tools they need to engage with them.

But there is a difference between exposing students to opposing sides of an argument and allowing them to be misled. I don’t think students should hear “all sides of the argument” about homeopathy, the link between smoking and cancer, or whether CO2 emissions cause climate change. These are cases for which, on the basis of the evidence, a consensus has formed.

In my view, the intention of the IEA is not to present a balanced discussion of an academic debate or even to honestly present their favoured side of a debate while acknowledging the existence of other views. I am not therefore objecting to the IEA presenting one side of an academic debate on the gender pay gap. I am objecting to them misrepresenting the entire issue. They present a distorted and extreme version of one explanation for the existence of the gender pay gap. I doubt any serious economist would regard their output on the subject as worthy of engagement.

There is a gender pay gap in the UK. This is a statement of statistical fact. “Gender pay gap” is the term used by the ONS when presenting the official statistics. It is the difference between median hourly earnings of women and men. The headline figure is 9.1%. The pay gap is smaller for younger cohorts and larger for older cohorts. None of this is disputed in Kate’s briefing note, despite the misleading subhead title “is there a gender pay gap?” A similarly misleading title is used to advertise the IEA’s schools programme: “Is there such a thing as the gender pay gap?”

This is not a valid question for an institution presenting itself as an “educational charity” to be asking. Examples of valid questions are “Why is there a gender pay gap?” and “Does the gender pay gap matter?”

There are a number of standard, incorrect, responses to these questions. Kate’s Twitter followers were kind enough to send many of them to me. As far as I can tell, all start from the fact that the difference in average pay is partly — but not entirely — due to the fact that women and men on average have different occupations, work in different industries and hold different positions within industries: women are more likely to work in the care industry and women are less likely to hold senior management roles, for example. While there are some differences in pay for men and women doing identical jobs, there is a much larger effect from men and women having different jobs.

Some present this as a terminological dispute — this means there is an “earnings gap” not a “pay gap”. This is just playing silly word games. Next is the simplistic response that the occupational structure simply reflects choices and preferences. This is the view underlying Kate’s “women choose to be mothers rather than employees” argument. But there is nothing scientific or economic about taking this position — it is instead a reflection of the pre-existing ideological disposition of the person taking it. The IEA has a “consistent philosophy” of favouring free markets and opposing government intervention. This is why they push the “individual choice” argument.

Finally there is the Jordan Petersen “you don’t understand multivariate analysis” argument. The shorthand version is, “once job differences are controlled for, the pay gap disappears”. The implicit interpretation of the “pay gap” here is not the statistical fact — these can’t be made to disappear — but the inferential statement that discrimination and/or structural factors (e.g. lack of access to childcare, unequal division of work in the home) are causes of the observed pay gap. Peterson and his followers claim that once you include occupational controls in multivariate regression analysis, the causal chain from gender to pay is eliminated. By implication, it is argued, discrimination is not the cause of the pay gap: occupational “choice” is. But discrimination and structural barriers exist at the level of access to occupations and job roles: women are less likely to be promoted into senior management roles, for example.

The use of occupational controls therefore introduces what statisticians call “collider bias”. No serious microeconomist would accept that the gender pay gap can be “reduced” by the use of occupational controls. Either Jordan Peterson doesn't understand multivariate regression analysis, or he is obfuscating the evidence to fit his argument (see the first comment here and the linked articles). The same is true for others who reproduce this argument: The Economist should know better than to subhead articles with false statements. (They do better in this article: “Britain has one of the widest gender pay gaps in Europe. For every pound that men earn, women make 80p, and the disparity has moved little in 15 years.”)

The IEA claims to be undertaking “economics education”. It is not — it is a political lobby group that refuses to disclose its funding sources. If the only time school students come into contact with the gender pay gap discussion is at one of the IEA’s school events, they are likely to come away with a false understanding of the “facts”. I don’t believe the IEA should be censored or banned, as Kate and her followers have suggested. I believe they should have their charitable status revoked. They will then be unable to present themselves as an “educational charity” when approaching schools.

As some pointed out, the word “pollution” is emotive. But if distorted analysis and biased political opinions are presented to students in schools as “facts”, under the guise of “economics education”, I believe it is accurate. The IEA — and other opaquely funded right-wing think tanks — like to disguise their political agendas behind a veneer of respectability by quoting academic papers. But these organisations only cite papers that support their political agendas. Likewise they rely on the line that “students should hear all sides of the argument” to ensure they are free to push these agendas. Simon Wren-Lewis clearly explains the problems with this strategy, and the resulting negative outcomes for society.

These “bad think tanks”, as Simon calls them, are not serious economic research institutions: they “produce ‘research’ that conforms to a particular line or ideology, rather than conforming to evidence or existing academic knowledge”. It is not appropriate that they should take this “research” into schools and present it as “education”.

Economists need to start calling them out.