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06/09/2008

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SM

another possibility is that many college administrations seek to increase enrollment for economies of scale, as a sign of success, or due to political pressure (when publicly funded). this is often facilitated by lowering entrance requirements for many programs, especially by community colleges. in my geographic region, it used to be common to have grade requirements to get into community college, but most programs now only require a high school dipolma, and not even that if you are above 23 years of age. anyone who has worked at the post-secondary level for long has likely encountered a desire (from administration or peers) to maintain/increase enrollments, if only to ensure the continued employment of the faculty and the flow of tuition money.

of course this is separate from the issue of whether the returns to education are worthwhile, and whether students are educated enough to good enough decisions that market pressure keeps enrollment levels on par with returns. just pointing out that there are substantial assymetrical knowledge, risk and economic issues for a student that generally do not match those of the educational institution.

Patrick

I work for a fast growing high tech startup. None of our jobs have anything to do with what we studied in college. The two senior developers were a history major and communications major. One executive jokes that he majored in pot. The consultants all consult in a field that did not even exist five years ago. Browsing through my facebook friends, virtually none of my friends do anything that uses their college degree. Or look at Larry Ellison, Bill Gates, Paul Allen, Mark Zuckerberg, Steve Jobs, and Steve Wozniak. These
are the people who have driven our technological economy, yet they all dropped out of college.

The real story behind the college premium is the growth of credentialing laws. Practically all well paid professions - doctors, nurses, medical technicians, architect, lawyers, civil servants, military officers, professor, most engineers, teachers - legally require a college degree. All of these jobs are either paid for by the state, or have special state privileges ( doctors have the monopoly right of dispensing medicine, etc.) Also, the Griggs Supreme Court case played an enormous role in forcing similar credentialing upon private corporations.

I mean seriously, how many people would be paying $250,000 grand for college and law school if they could pass the bar through self-study, like Lincoln's did?

Because people go to school for the legal credential, the college has lost all incentive to actually educate. I was talking to a friend going to law school the other day, who reported, "During the summer we do internships where we get paid and we actually learn. Then we go back to school where we haven't learned anything useful since the first year." Another friend getting a masters in architecture reports the exact same thing. After a three years masters they have learned about "aura" and been indoctrinated in modernist architecture ( where they aren't allowed to use style books, because that's not "creative"). They haven't however, learned anything that's on the licensing exams, or anything else about how to actually practice architecture. That they have to learn on the job.

What we need is iron clad separation of credantialing and schooling. Only then will we be able to determine if the college premiums is really a result of returns of investment in human capital, or if it really represents the bureuacratization of our economy. My money is on the latter.

Ryan

Prof Becker doesn't seem to respond to comments, but I would be interested to know if the returns to a college education increased for non-marketable majors as well, such as liberal arts, humanities, english, etc. If increasing returns to education over the past generation are due to increasing human-capital productivity--then what are these non-marketable majors doing differently today? How is shakespeare different today vs 30 or 100 years ago?

Thomas Brownback

I would like to second Ryan's question: How are the returns on education doing if we kick out the engineers and leave just the liberal arts majors?

Also, other groups might disproportionately account for these returns on investment, like top students and students from top schools.

The value of a college education to the kid who is on the fence about going or not going to college seems poorly measured by considering the gross returns to all college graduates.

So what are the returns on investment for a mediocre student at a middle of the road school pursuing a liberal arts degree? Are these returns still positive?

Thomason

Whether (or which) college degrees 'add value' to a person or to their earning scale is debatable, and may not be quantifiable. But, lacking a sheepskin plainly reduces earning opportunities. Analogize to any recognized distinction. Which is the better restaurant, one in the Michelin guide, or the one your best friend recommended - it's unknown, but more people may dine according to one recognized in the guidebook, even if it's not 'better.' So too, a lot of folks get degrees because they weary from being passed over for opportunities, in favor of anyone who has one more line on their resume.
As to the point about world populations with cheaper labor, consider this. Many companies, who'd tried outsourcing, ended that trial because of the perceived lack of education of those foreign workers. Then, outsourcing companies began to point out how many of their workers actually had degrees from the U.S. or Common Market universities - so, companies resumed outsourcing. The workers there, and their capability to do the work, and the cost for their work, did not change. It was the reassurance of knowing of their degrees from schools in the West that changed the employers' view of how the working relationship should be valued. So, how much were the degrees of those foreign-based workers worth?

Jack

Whew! Ryan? and Thomas?? "non-marketable" degrees?? If you read Patrick's post I think you could see that "learning to learn" is one of the values of advanced education. Did you know Carly Fiorina, who was CEO of all those engineers, scientists and techies at HP was a liberal arts major? English, history and liberal arts in general; what do you suppose those planning to become attorneys major in, in college? Those planning to be diplomats or politicians?

"The value of a college education to the kid who is on the fence about going or not going to college seems poorly measured by considering the gross returns to all college graduates."

........ wrong question in my mind. When I went to school most academics emphasized "a richer life, a better citizen, appreciation of arts and our culture" over simply looking for a return on investment in terms of one's worth to the corporate world.

Looking back I'd say they were exactly right and suggest we'd do better individually and have a much better nation were more tradesmen and others whose vocations don't "require" college to be grads or at least have a couple of years of liberal arts, political science, a class or two in law including an introduction to our Constitution.

It is indeed a shame that our stagnant wages for those of median, and below, makes the decision to spend money on college such a critical "business" decision.

And Thomas; perhaps it's even more advisable for the slow student to go to college; while he may not reap the rewards of a "front runner" consider what his lot is likely to be without college opening the doors to the "certificate" jobs Patrick mentions?

SEO

Prof Becker doesn't seem to respond to comments, but I would be interested to know if the returns to a college education increased for non-marketable majors as well, such as liberal arts, humanities, english, etc. If increasing returns to education over the past generation are due to increasing human-capital productivity--then what are these non-marketable majors doing differently today? How is shakespeare different today vs 30 or 100 years ago?

Agree...

grey

Currently, certain states of Australia are undergoing huge mining booms driven (mainly) by Chinese demand for raw materials. As a consequence of this rapid expansion, large salaries are being offered to young people who are willing to move "up north" and work on the mines. The result of this has been a significant fall in the number of students leaving school and attending university.
(eg. http://www.theaustralian.news.com.au/story/0,25197,23481617-12332,00.html)
Obviously the value of earnings now to these people outweighs the NPV of higher future earnings that they would expect if they decided instead to go to uni.

haotian

anychance the currently more women than men are in college fact furthur is somehow going to widen the gap of income between female and male workforces?

neilehat

There is an issue in upper level education that I believe is being overlooked here and elsewhere that has potentially dire consequences for the Nation (yet is one of golden lies of the Free Traders movement). That is, the growing numbers of foreign students in American Universities. These students are taking up spaces that would have normally gone to American students, especially in the fields of Science, Mathematics, Engineering and Technology.

I can remember back to my days on campus when it was a big joke that there was huge mansion that was occupied by Iranain students, known to the student body at large, as the "Iranian Embassy". Large numbers passed through its doors, wearing civilianised versions of military uniforms and diplomatic suits. Where was the money coming from and why? Meanwhile, many Americans were kept out of advanced science and engineering programs that are vital to the Nations success and security.

Now the world is confronted by the specter of a Nuclearized Iran. Was this really only "Atoms for Peace"? I won't even mention the other transfer of process's and technologies that have taken place because of this knowledge transfer. Much to the detriment of the Nation, not only in the military realm, but also on the economic trade front.

National security? Don't worry about it. We live in a warm and fuzzy world where confrontation and war are things of the past.

David Heigham

As Professor Becker will be aware, the usual figures or returns to higher education include only earnings differentials. They are therefore substantially underestimated.

Apart from higher pay, someone with college education can also expect to live extra years, have less health problems, gain consumer satisfaction from the wider range of consumption options which they are educated to enjoy, have a better chance of marrying an educated partner and sharing in his or her gains from higher education (including probably a chance of benefiting more than otherwise from a partners' inheritance from his or her family). I would guess that college training and contacts also increase the probable lifetime total of your capital gains as well.

All this seems to apply regardless of the subject or subjects you majored in. That statistical result is no surprise when I think that the college subject which proved of most use in my own working life was philosophy. I never applied it directly, but it taught me how to learn.

The benefits also apply in all countries for which I have seen results. The world-wide surge in demand for higher education therefore makes excellent economic sense. As to where the limits to the benefits will be found, after looking for them for fourty years, they still have not shown over the horizon. I guess that is because higher education enhances people's abilities to learn about others ideas and innovations. It just might also help people to come up with new ideas of their own; but that I regard as not proven.

Jack

Patrick. good comments and I'd agree with most of them and even add that the current system with its emphasis on getting a sheepskin for career purposes is all too often taken by the student as a vaccination after which there seems little quest for more knowledge. You almost line out a prescription for school reform or an alternative.

As for cost it does seem "$40,000" is too high and unmanageable for many. But starting with $8,000 for public HS costs, and college profs earning and perhaps deserving twice what HS teachers earn, the cost per student would have to be higher, though college aged kids can more easily learn from the big lecture halls than can HS students.

While some kids seem ready to go off to a "big school" as freshmen, it seems to me that more could do well living at home or nearby and going to a local college that may well be part time and modeled on your suggestions. Recently I've seen a lot of the "front runners" that were my boy's friends in school go off to school and drop out for a bit, while others seem able to continue "getting good grades" as they did in HS.

I'm not sure about your "indoctrination" comment though. If it's about college folk becoming more liberal, (except in engineering??) I recall watching some of that happen as Soc profs asked questions as to how a farm subsidy differed from a food stamp or other "welfare" program while other classes revealed some of the inequities of our society and justice systems, and economics classes explored the difficulties of "many unorganized sellers" when the encountered the better organized "few buyers".

neilehat

Jack, "except in Engineering??" It's like the rest of the University, some are and some aren't. Then there are the ones who are still trying to figure out their pocket protectors, some of them though, are the "go to" guys, especially if you're having problems with "Diffe Q". ;)

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