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When it comes to household debt, mortgages still dominate. But you might be surprised to learn, as Brookings 's Isabel Sawhill notes, that student loan debt is now the second biggest source of debt for U.S. households--ahead of credit card debt and car loans. Taking on that debt still is not a terrible idea ... as long as you graduate. Sawhill and Ron Haskins , her co-director at the Brookings Center on Children and Families recently discussed the economic advantages of a college education. And they raise an interesting question: is the U.S. government's approach to subsidizing higher education paying off?

There is something of a correlation between ethnic diversity and economic development in developing economies, but the real problem may be economic inequality along ethnic lines. At VoxEU , Alberto Alesina , Stelios Michalopoulos , and Elias Papaiaonnou share some of what they have learned while investigating the impact of ethnic inequality. Ethnic inequality is naturally correlated with the overall degree of spatial inequality. Since we are interested in uncovering the role of ethnic inequality beyond the overall spatial inequality Figure 2 portrays the global distribution of ethnic inequality partialling out the effect of the overall degree of spatial inequality. A few interesting patterns emerge. On the one hand, Sudan, Afghanistan, and Mongolia have much higher ethnic inequality as compared to the overall degree of spatial inequality (which is also very high). On the other hand, the US and Canada score low in ethnic inequality as compared to the overall degree of spatial inequality (which is quite high). Azerbaijan, Syria, Albania, Tunisia, Haiti, and Rwanda score quite high in ethnic inequality, while in contrast the overall degree of spatial inequality is very low. Looking at figure 2, you can see why the authors chose to focus on sub-Saharan Africa. In looking at the data for that region, they conclude that the combination of ethnic fractionalization and inequality is the real culprit: The interpretation of cross-country regressions is always challenging as countries differ across many and hard-to-account-for dimensions. In an effort to improve on the cross-country evidence, we used individual-level data from 17 sub-Saharan countries on wellbeing, education, public goods provision, and ethnic identification and explored whether ethnic inequality correlates with various development proxies across districts in the same country. Moreover, since members of the same ethnic group are present in more than one district, we can look within members of the same ethnic group. Exploiting information from more than 20,000 respondents, our analysis shows that, conditional on an array of individual characteristics, respondents living in the same country and coming from the same ethnic group report worse living conditions, lower levels of education, and inadequate access to basic public goods when they reside in districts/regions characterised with a higher degree of ethnic inequality. These results thus suggest that ethnic inequality may be an important, and so far neglected, feature of African underdevelopment. Our conjecture has been that what is harmful for development is neither inequality per se nor ethnic (or religious) fractionalisation, but the combination of the two. When wealth and poverty are clearly associated with distinct ethnic groups, the resulting ethnic inequality hampers development by generating hatred, social immobility, envy, sense of unfairness, and conflict, which create obstacles to the smooth functioning on the polity and of the economic system. Disentangling the relative importance of these channels is a fruitful avenue of future research. Read the full article here .

Yu Yongding is not surprised that China's economic outlook has begun to look rosier, with the growth rate picking up this quarter. But the past President of the China Society of World Economics and Director of the Institute of World Economics and Politics at the Chinese Academy of Social Science warns China's leaders not to get complacent. At Project Syndicate , Yu writes: The true challenges facing China lie in the medium and long term. Indeed, the current economic rebound is not an achievement worthy of much celebration, especially if it comes at the expense of further reform and structural adjustment. First, as China ages rapidly, the disappearance of its demographic dividend will lower potential growth significantly. Moreover, other things being equal, the extremely rapid rise in fixed-asset investment has eroded China’s investment efficiency and capital efficiency, reducing potential output growth further. And, as China’s economy approaches full technological modernization, its latecomer’s advantage will be exhausted, and its inability to innovate and create may become an important bottleneck to further growth. Although active participation in global production networks has brought significant benefits, it may have locked China into the lower end of the value chain, reducing its scope for future progress. Other constraints loom as well. Rapid economic expansion implies that supplies of energy and raw materials will increasingly limit potential growth. At the same time, the public’s demand for environmental protection and other basic rights will inevitably increase production costs. Similarly, the external environment may become less favorable, as the long process of global deleveraging impedes economic recovery in China’s key foreign markets. Finally, despite China’s status as one of the world’s largest net creditors, it has been running a deficit on its investment balance for years. If this pattern persists, China may well face a balance-of-payments constraint on growth in the future. Read China's Coming Growth Tests here .

The World Economic Forum 's Global Gender Gap 2012 is out, and there are not many surprises at the very top of the list. Iceland, Finland, Sweden, Norway and Ireland all hold their places in the top five. There is one newcomer to the top 10. Nicaragua comes in at number 9 in the Global Gender Gap Index, up from 27 in 2011 and 90th just five years ago. The jump comes largely from a significant increase in the political empowerment of women in Nicaragua over the last year. That made up for a relatively poor ranking in economic participation of women. The Gender Gap index is based on the World Economic finding that greater participation of women in the labor force and in policy correlates with stronger economic performance overall. As the report's authors note, "The most important determinant of a country’s competitiveness is its human talent—the skills, education and productivity of its workforce—and women account for one-half of the potential talent base throughout the world." The below figure, from the report, plots countries' Gender Gap scores against per capita GDP. From the report: The correlation among competitiveness, income and development and gender gaps is evident despite the fact that the Global Gender Gap Index (unlike other gender indexes) explicitly eliminates any direct impact of the absolute levels of any of the variables (e.g. life expectancy, educational attainment, labour force participation) used in the Index. While correlation does not prove causality, it is consistent with the theory and mounting evidence that empowering women means a more efficient use of a nation’s human talent endowment and that reducing gender inequality enhances productivity and economic growth. Over time, therefore, a nation’s competitiveness depends, among other things, on whether and how it educates and utilizes its female talent. In Figure 10, we plot the educational attainment subindex against the economic participation and opportunity subindex. The data in the Global Gender Gap Index reveals four broad groups of countries: (1) countries that are generally closing education gaps and show high levels of women’s economic participation, (2) countries that are generally closing education gaps but show low levels of women’s economic participation, (3) countries that have large education gaps as well as large gaps in women’s economic participation and (4) countries that have large education gaps but display small gaps in women’s economic participation. You can access the full report, including data tables, here . And watch a summary of the report below:

Joseph Stiglitz is most concerned about the growing economic inequality in the U.S.--where he points out there is "less equality of opportunity" than in " any advanced industrial country for which there are data--because of what it means for the nation's "values and identity." But in an op-ed at Project Syndicate he goes beyond the values argument to point to inequality as an economic concern for the nation as a whole. Stiglitz argues that there is a great cost to growth of the economy at large when opportunities get more and more disproportional. After all, he writes, " America grew far faster in the decades after World War II, when it was growing together, than it has since 1980, when it began growing apart." This shouldn't come as a surprise, once one understands the sources of inequality. Rent-seeking distorts the economy. Market forces, of course, play a role, too, but markets are shaped by politics; and, in America, with its quasi-corrupt system of campaign finance and its revolving doors between government and industry, politics is shaped by money. For example, a bankruptcy law that privileges derivatives over all else, but does not allow the discharge of student debt, no matter how inadequate the education provided, enriches bankers and impoverishes many at the bottom. In a country where money trumps democracy, such legislation has become predictably frequent. But growing inequality is not inevitable. There are market economies that are doing better, both in terms of both GDP growth and rising living standards for most citizens. Some are even reducing inequalities. America is paying a high price for continuing in the opposite direction. Inequality leads to lower growth and less efficiency. Lack of opportunity means that its most valuable asset - its people - is not being fully used. Many at the bottom, or even in the middle, are not living up to their potential, because the rich, needing few public services and worried that a strong government might redistribute income, use their political influence to cut taxes and curtail government spending. This leads to underinvestment in infrastructure, education, and technology, impeding the engines of growth. The Great Recession has exacerbated inequality, with cutbacks in basic social expenditures and with high unemployment putting downward pressure on wages. Moreover, the United Nations Commission of Experts on Reforms of the International Monetary and Financial System , investigating the causes of the Great Recession, and the International Monetary Fund have both warned that inequality leads to economic instability. Read The Price of Inequality here .

Whether on Facebook, Google+, or the original social media: word of mouth, odds are pretty good a friend told you about Warren Buffett 's Stop Coddling the Super-Rich column in the New York Times this week. That is if you didn't read it in the Times first yourself. It remains one of the NYT website's most emailed articles. Maybe you think Mr. Buffet has gone mad. Maybe you think he said what needed to be said, and was just the right person to say it. Maybe you take issues with his logic. Whatever the case, it is worth following up the piece by watching Buffet explain himself, on Charlie Rose :