December 10, 2015

Dr Marian Vidal-Fernandez is a Life course Centre (LCC) research fellow and a senior lecturer in economics at The University of Sydney’s School of Economics.

She is a labour economist who uses applied micro-econometrics to study policy-relevant issues in labor, education, and health. Her research focuses on the determinants human capital within disadvantaged children and young adults. 

As an economist what are your interests in the study of family dynamics and disadvantaged children?

My interest in disadvantaged children came before becoming an economist and drew from my own personal experience.  I came from a pretty disrupted family (that I adore!). When I was 17 years old my eldest brother died from an overdose.  We were not only very close, but also very similar, and I keep wondering why I found myself having the life he could have had if his circumstances had been different.

In my search to understand that, I initially enrolled in psychology. I soon realized that wasn’t going to be an enduring career interest and ended up enrolling in economics instead, where I came to realize the power of data analysis in understanding how life circumstances, policies and incentives shape people’s lives.

You are also a research fellow with LCC. What are you hoping to contribute to the Centre and why were you interested in being part of it?

The Life Course Centre is the best example of the direction that I believe that leading social research should be heading, and I feel privileged to be part of the ambitious work of the Centre.

Its interdisciplinary framework puts researchers together from different fields who have the common objective to: fight social disadvantage over the life course. I believe great ideas can come from collaborative academics, who have a shared vision, and work together with different ideas, knowledge and backgrounds that complement each other.

That is precisely what the LCC is doing and the fantastic conference in October is a great example. While I am relatively new to the Centre, I am eager to further contribute to the working paper series, and to start and provide feedback on projects with other Fellows.

Why are you interested in policy?

As an empirical researcher my ultimate goal is to gain knowledge to derive policy implications. Economies have limited resources and research allows us to choose which policies are most cost-effective.

When we are born we can’t choose our parents or health status and most of us are not able to decide where we live or which school we go to. This is unfair because it places some children in circumstances of disadvantage with respect to others, just by the chance of being born in a particular place at a particular time.

That is why I believe institutions have the responsibility to redistribute resources and ensure disadvantaged children are able to catch up while they are still in school and spend a considerable amount of time in a public institution. Moreover, economic growth is highly dependent on human capital and by allowing children to reach their potential we are actually improving overall welfare.

 Tell us in a nutshell what human capital is and why it’s an important consideration for the Centre?

From my perspective, as an economist, human capital comprises all elements that make an individual productive in the labour market (i.e, wages). In a nutshell, the main determinants of human capital are education, health, cognitive and non-cognitive skills.

Using a solid data analysis toolbox, labour economists have traditionally focused on the determinants of education. More recently, there has been an increased interest in evaluating the relevance of non-cognitive skills to determine human capital and analyzing other outcomes other than wages, such as fertility or crime.

Thus, we are increasingly using measures that are more common in other disciplines such as psychology or demography. That is why the LCC is crucial in providing a common umbrella where social disciplines discuss and work together to pursue excellent interdisciplinary research and learn from each other.

 Why are early life circumstances for children important for later outcomes?

There is a vast literature showing that education attainment not only influences wages but also income, marriage outcomes, fertility, crime rates and health. Even circumstances in vitro can shape your health and your ability to learn. Thus, the earlier we tackle equality of opportunity at birth, the narrower will be the gap over the lifetime.  However, it is often hard to aim at children who are really young and spend most of the time at home with their parents. Once they are old enough to attend school or preschool, we can devote resources to improve the quality of schooling in neighborhoods, when children need it most. And by the time they finish school the gap has narrowed and they can access further education to escape the poverty trap.

What policy effects would you like to see the Centre have and how do you think it is best to present evidence to policymakers?

I think policymakers should be the ones presenting us with their ideas before implementing them. We can guide them through the evidence and towards evidence-based policy interventions designed in ways that can also be evaluated.  The LCC is already establishing a common ground for policymakers and researchers to work together towards that goal. A good example is how the LCC is stablishing a dialogue among agencies in Australia to make the linkage of administrative data available to researchers.

As an economist what do you think about the popular book Freakonomics? Why do you think it’s been so popular and do you think there are any lessons to be learnt from the popularization of economics research in regards to improving society’s knowledge about economics and social disadvantage?

Steven Levitt has made being an economist quite sexy and I think that it is positive for our profession, especially because he encourages reflection on one mistake we all tend to make: correlation does not imply causation.

A classical example mentioned earlier is the positive relationship between education and wages: smarter individuals are both more likely to get more educated and earn high wages, therefore, while we want to believe that education increases wages, there might be another link between those variables that we are missing in our train of thought.

Labour economists try to find ways in which we can imitate the clinical sciences by creating some kind of experiment where some individuals receive a policy “pill”. For instance, in the US, compulsory school attendance laws made some students stay in school for longer, regardless of their ability in different states at different points in time. Then you can compare cohorts of students affected and not affected by that law in a state and, under reasonable assumptions, if those forced to stay in school had higher wages on average, it might be more likely due to the additional time spent in school.

I think another interesting element in these examples is that incentives matter: you can design a policy with the best intention, but you need to also think carefully about unintended consequences or perverse incentives it can generate.

A simple example is Sydney’s new transport system that charges users depending on distance and caps the cost at eight trips weekly, regardless of distance. The gaming to get around this was easy: use the card for eight short trips even if you rather walk one stop and once the cap is reached any remaining long trips are free.

A few months after its implementation, there were already discussions about revising the fare system. Economists, and in particular labor economists, tend to act as the devil’s advocate by trying to pin down causality and unintended consequences, and these popular science examples illustrate the effects of a policy with every day examples.