Excess Enrollments in College? Could Be. Posner

Becker’s data are solid, but I am not what inferences can be confidently drawn from them. 

In particular, I doubt whether it’s possible to infer the value of a college education from a comparison of earnings of college graduates to earnings of persons who do not graduate from college (I’ll ignore the intermediate category—persons with some college but not a bachelor’s degree or better). The reason is that kids are not randomly assigned to go, or not to go, to college. The noncollege graduates are therefore not a valid control group. I am not aware of whether there have been efforts to control for IQ differences in assessing the effect of a college education on earnings. 

Suppose returns to IQ have risen because of the increasingly technological character of economic activity (including finance), increased automation of work tasks (including many service jobs), and increased outsourcing of low-skill jobs in manufacturing. This does in fact seem to have happened. Such increased returns would increase the college enrollment and graduation rates because of the complementarity between IQ and college (and graduate-level) training. But the driver of the increased earnings of college graduates would be IQ and the college and graduate education of high-IQ kids, rather than the demand for college graduates as such. And there would be no basis for inferring benefits of college for kids who did not have high IQs. 

Such a pattern would be consistent with excess college enrollments, if many college students were insufficiently intelligent, motivated, energetic, etc. to benefit from a college education, but were enticed by low-cost government loans and by skillful marketing into attending college. 

I am merely questioning whether the difference between the average earnings of college graduates and of high school graduates (I am ignoring the average earnings of kids who don’t graduate from high school) necessarily represents the return to a college education. If the earnings of high school graduates are dropping because of reduced demand for such graduates owing to a shrinkage of the kind of jobs for which they are suited, the gap between earnings of college graduates and non-college graduates will expand even if there is no increase in the average earnings of college graduates. And there might not be an increase if a large number of high school graduates are enrolling in college who do not have the qualities that enable them to benefit from a college education. 

Because as Becker points out the cost (the tuition cost rather than the opportunity cost) of college has been growing rapidly, attending college is a particularly bad choice for kids unlikely to benefit from a college education. It is then pretty much all cost and no benefit. 

This leads me to question the proposal that debt on federal loans for college education be made inverse to incomes. That would mean that the lower the college graduate’s income, the lower his debt; but if his income is low, how likely is it that he benefited from college? 

A better idea might be to borrow from the German model of providing technical education in lieu of college. There are many high-skilled jobs (though fewer than there used to be) that require careful training but not a college education, such as being a crane operator or an air traffic controller or a mortician. I don’t know why people who are aiming for such jobs, or who cannot realistically aspire to upper-middle-class jobs, should be attending college, other than for the prestige and social opportunities of being a college student and especially a college graduate—not that those are negligible dividends from a college education, but they will often not to be worth the cost, both direct and opportunity, of college. 

I wonder what role high school guidance counselors do play or should play in helping high school students decide whether to apply for college admission. It would not surprise me if good counseling resulted in fewer applications. 

And a final point: I think the “general education” that colleges traditionally impart is less important than it used to be because of the rise of the Internet. The Internet provides kids from early childhood on with immense informational (including cultural) resources, as a result of which I believe young adults today are better informed and more intellectually sophisticated than used to be the case. They may not need college as much, unless they are aiming for and have the aptitudes for an upper-middle-class career.

Comments

[Mattnotda]

I agree that the relationship between a college education and higher income is not always causation, and that studies investigating the correlation between the two need to account for the effect of IQ and other factors. However,

1. While our potential IQ is genetic, the degree to which it is expressed depends on many things, including education and other mental stimulation. In short, a good education, both in college and earlier, will increase one's IQ.

2. Undoubtedly there are many people enrolling in college who should not. But I would not call this "excess enrollment", as there are also many people who do not utilize this opportunity, whether by choice or because of their circumstances.

3. Increased income from college depends largely on either acquiring marketable skills in college, or at least convincing someone that you did. Many of those in college are specializing in areas that will not translate into particularly marketable skills. This is going to depress the apparent benefit from a college education.

[Terry Bennett]

One of the most peculiar myths underpinning the liberal agenda is deliberate conflation of the concepts of skill and talent. Proponents rail, "We need to train our workforce to lower unemployment!" This presumes that the only difference between a person with a job and a person without a job is a specific, objective, teachable skill set. The people saying this are not the people doing the hiring, so maybe they don't have a clue - or maybe they know better and lie.

Many people don't get hired because they are obviously stupid, or obviously non-conformist. If they obtain a learned skill set, they still show up for an interview as a stupid and/or non-conformist person with a learned skill set.

Thanks once again to Judge Posner for giving this implicit discounting of talent the stiff punch in the nose and curt dismissal it warrants.

However, as I noted in response to Dr. Becker's post, it certainly appears to me that there is value in a college degree, even for an individual of marginal IQ, because employers in our time have elected to rely so heavily, even blindly, on this qualification. A degree is a ticket to the dance, because the owner of the dance hall says so. Whether you can dance or not is a separate question, to be answered later when the music starts.

As for what to do about it, I do agree that there is great efficiency to be gained by increased targeting of education to real world jobs. As an example, one of the jobs that cannot be outsourced is the configuring of desktop computers, local area networks, and other tech hardware in the workplace. An individual can take a several-month course and learn how to do this specific work, take a test / get a certification (such as Microsoft's "A+"), and can then productively go to work in an office maintaining tech infrastructure. The problem is that the certification, however valid, only documents the skill set, and not the "show up for work" part of the employer inquiry. Employers choose to continue leaning on their recently discovered shortcut, and post the job requirements as "bachelor's degree PLUS tech certification". So, we're right back where we started. One thing employers could consider doing is setting their hiring baseline as "bachelor's degree or honorable military discharge". A military tour documents the same thing as the college degree - those guys definitely know how to show up for work!

I agree with Matt (not Da) regarding the perverse incentives of Dr. Becker's low wage / low repayment suggestion.

[Neilehat]

How does one square this analysis with the examples of the likes of Warren Buffet (a college dropout) Bill Gates (also college dropout) and many others. Perhaps the Ancients had a better insight and understanding into this phenomena than us by attributing it to Fortune, Destiny and Lot (as Ulyses was well familiar - the Gods do play with us). As some today would call it, "just plain dumb luck". No matter how well educated or uneducated one is; we all still have to pull a stick. Some get the long ones, others the short. Oh well, such is Life and the Gods do like their games...

[Jack]

Posner seems lost on this one but perhaps excusably so.

It seems that just in my lifetime that any mention of reasons for college including that of enjoying a richer life and becoming a more knowledgeable and better citizen has completely yielded to "college as trade school" to prep one only to join one or another corporations that no longer invest much in training their (expendable?) employees.

Aaah! but all that "richer life" stuff may have been back when one's college days were not bankrupting the family or self and a student had the time and opportunity to, at least, be exposed to the arts and reading some of the classics, or taking a flyer as an amateur thespian.

Posner's rejection of making college loans inversely proportionate to one's career earnings does bring up a good question:

In other nations far more of the college costs are paid by general taxes which sounds like a somewhat similar idea.

While Posner tries to make the case that those whose incomes did not greatly benefit from college........... didn't benefit. Do we think that is true?

Perhaps teachers are the most numerous examples of those graduating from nearly five years of college and some internship but not zipping up the income ladder. Indeed the plumber or electrician is likely to out earn them. (Though with both requiring 4 year apprenticeship it could be argued they are college grads in their specialty.)

So let's consider 2/3rds of college tuition being taxpayer supported. (And a few other things like limiting out of control college inflation)

In this way a teacher or one dedicated to toil in other social science trenches graduate with little college debt and very likely with relatively modest incomes on the payback side. Those who grab their diploma and promptly head to WS or "white shoe" lobbying and law firms to carve off unearned millions will pay back a lot more.

What of the kid who didn't go to college? Well, first off, and sadly, it looks as though their incomes aren't going to trigger large tax liabilities and surely they and our society and economy in general benefits by being "led" in many cases by those having gone to college.

[Eric Rasmusen]

I have the same question as Judge Posner. The high school graduate of 1960 might become a well-paid worker at General Motors. Such opportunities are less available now, with free trade, high immigration of unskilled competitors, and the decline of unions. One new well-paid job is that of computer programmer. This requires high IQ (by which I mean, say, top 1/3 of the population) and training, which college provides (tho one could learn on one's own, and some people do). So the wages of college grads rise. But suppose you advised someone in the bottom 1/3 of the IQ distribution to go to college to get a good job. That person would flunk all his programming classes, and switch to something like sociology. He would not end up with a well-paying job, because college does not complement his talents.

[Jack]

Plus: You paint a fairly accurate picture of the situation. Let's consider why those flocking to Detroit in the 50's and earning good wages in the 60's, 70's were making good money:

One, of course, after the War and before the boomers was that of scarce labor at a time when it took many more hours to build a car than today.

Next, was because, even then, assembly line building of cars was highly productive and the mfgs could afford to pay good wages.

Lastly, and you touched on it, was because collective bargaining units had good leverage with the auto companies.

Today there are highly productive businesses that could pay much better wages, for example Walmart with the fattest bottom line in world history, but, as you point out there is surplus labor, and a LACK of collective bargaining units.

Too few, it seems, understand that lower and medium skilled labor has NO market power. I was for a time a computer programmer. As you point out not everyone can do that work (and Ha! I might make a week but no more on an assembly line) but they aren't immune from being undercut (as they are by H1B Visa quotas and the glass fiber that sends much of the work abroad) and like "upper IQ" welders, shipfitters, machinists, tool and die makers before them/us, they'd benefit from being organized not only to negotiate with employers but to have effective lobbyists in DC where the overall "deals" are made.

I guess we can "explain" that "high IQ", college, being clever, connected etc results in the income distribution depicted in these two graphs, but however it got that way, it's NOT sustainable. By one means or another "the benefits of developing our resources" have to accrue more favorable to "the people"........ not one or ten percent of the people. A bit further out on this plank lies catastrophe.

[B Wilds]

In many ways society is encouraging young people to take on this debt and to hock their futures. This is akin to the, "I will gladly pay you Tuesday for a hamburger today" way of thinking. While it serves the propose of keeping large numbers of young Americans off the unemployment roles, it promotes a huge negative we can not ignore, much of this money is being poorly spent. I personally have witnessed several of these students rent an apartment, fail at school, and then be forced to move back in with parents when the money ran out. Sadly like the gifts from pawn brokers and pay day loan sharks, many of the borrowers will live to regret taking this easy money. More on this subject in the post below,
http://brucewilds.blogspot.com/2012/04/students-borrowing-against-future.html

[Jacob Arnon]

Judge Posner have you been following the latest in the Paul de Man controversy? As a student of literature I thought you might be interested.

First there was a book review in the Chronicle of Higher Ed. on a new biography of the former Nazi collaborator.

http://chronicle.com/article/The-Many-Betrayals-of-Paul-de/142505/

There have since been to vicious attacks on Evelyn Barish the former University Professor who wrote the biography, now retired.

The first is by SUSAN RUBIN SULEIMAN and the second by the renowned Professor: Peter Brooks

Not content with a single hatchet job of a review the NY Times published a puff piece supposedly explaining the book from Professor Barish's point of view but which is actually another attack on her integrity and competence if not sanity:

http://www.nytimes.com/2014/03/10/books/revisiting-a-scholar-unmasked-by-scandal.html

here is Brooks in the NY York Review of books:

http://www.nybooks.com/articles/archives/2014/apr/03/strange-case-paul-de-man/?insrc=hpss

Brooks and Suleiman are professors of literature and as colleagues of Paul de Man and fellow deconstructionists have a stake in the book they were asked to review.

The whole incident is very offensive, just how so one must read these self-serving reviews.

They attacked a fellow professor of literature questioning her right to write about the life of de Man, con artist and quondam anti-Semite and Nazi collaborator.

I would be very interested in your reaction to these attacks on Professor Barish from the point of view of a Judge who has also written about the relation of literature and law.