David Feldman pushes back against the notion that college is a poor investment:
Okay, but the price tag is still very high; is it worth it? Absolutely. A college degree is an asset whose average value is $300,000 to $600,000 of extra lifetime earnings, measured in today’s dollars. And this value has risen steadily for the past 30 years. Your mileage may vary, depending on what you choose to study, but earning a college degree remains one of the best financial investments a person can make.
Nobody is saying that earning this degree is a guarantee of financial success. Even today, 18% of the college-educated workforce in prime working ages earns less than the median wage of a high school educated laborer. But in 1972, the figure was 30%. Think about that the next time someone claims that a college degree simply doesn’t pay off like it used to.
The “your mileage may vary” is understated here. It’s not just a matter of what you choose to study. It’s also a matter of who you are and where you go. People who go to some schools will make more than people who go to other schools. This is attributable to both the who and the where questions (partly because the who can determine the where). I am not sure where Feldman is getting his numbers, but it’s typically based on averages. That’s problematic because the people who go to college are not the same people who don’t. Those who graduate are not the same as those who don’t. If anyone wants to point me to some numbers that are comparing apples-to-apples, I’d appreciate it.
Right now, there are a lot of people who go to college and never really finish. It’s noteworthy that such people out-earn those that never went, in part because it goes towards the self-selection and (to a lesser extent) networking opportunities of college as much as what you actually learn by going.
The thing about self-selection and networking are that they have less to do with college itself and more to do, again, with the who and where. The more people you send to college, the more you dillute the networking effect. Self-selection is useful for employers, but less useful on a practical level. Also, the more people who self-select for college, the less of a signal that is for employers.
The signalling effect itself problematic. Both the self-selection and credentialism that college often offers. To the extent that employers are using a college degree simply to weed-out, higher education is simply an HR subsidy for employers. Students and government take on the cost, employers get the benefits. I’ve mentioned this in the past as it pertains to particular training (learning a coding language, for instance), but it’s just as true if we’re talking about liberal arts majors getting the good wait-staffing jobs.
Despite all of this, the game as it is now played still favors college. That’s one of the big reason that, barring something unforeseen, Clancy and I will be encouraging our future children to go. Even for people who are skeptical of the universal value of college, such as myself, there are collective action issues at work. I want my children to be at a credential advantage over someone else’s. If I opt out, I’m putting them at a comparative disadvantage (or denying them a comparative advantage). If I deny them the networking opportunities of college, I am doing the same.
For a variety of reasons, I expect my future kids to be on the intelligent side of the spectrum. My expectations of an adopted child might be different. This goes towards my belief that no, not everyone is college material. My children may not be themselves, though I’d still burn through some money making sure. I’m probably more likely to take an adopted child at his word that college is not for him, whereas I’d fear my direct spawn might simply be taking after her father and grandmother as someone who wrongly thinks that college isn’t for them.
The great sorting of who is and is not college material is a quandary. At the least, I think self-selection is actually a reasonably good criteria. I’ve known people who obviously weren’t college material, didn’t have any particular interest in going, but went anyway. This rarely turned out well (even when they did graduate). The overwhelming push to get kids to go to college strikes me as problematic, in good part because of this. So, too, is determining college material on the basis of ability-to-pay.
I don’t see any great solutions here. Those that I would propose, merit-testing, are not likely to go over well simply because nobody likes to admit the differentials in potential. It’s also problematic because most objective and realistic assessments would favor girls, Asians, and whites. Any attempt to account the differences here would be met with stiff opposition. I think it’s worth pursuing anyway, accounting for differentials mostly on the basis of background and taking those borderline cases and running them through community colleges to see how they do, but I’m not optimistic on account of America’s uncanny optimism about college.
[This post was adapted from this Hit Coffee post.]
Going through my Drafts, I ran across a related thing I meant to write about. There was a post a while back on OTB about how people with college degrees command better salaries even in jobs that don’t require them. Since it’s related, I thought I would share my comment on it:
There are three factors at play: the value-added by going to college, where going to college puts you in the job queue, and the type of people that go to college and those that don’t. The second factor is such that someone with a degree that buses tables is likely to get a job at a much, much nicer restaurant. Not because a degree in English lit helps you bus tables better, but because those doing the hiring have to make their decision on some basis and feels more confident that someone with a college degree will act more professionally than somebody on the street. Signalling and all that. The third factor is pretty straightforward: those with the upbringing, discipline, and smarts/talent to get through college might do just as well if they never went (if given the chance).
All of this to say is that going to college is a no-brainer when it comes to the individual. But as a signalling mechanism, it’s pretty inefficient. If it is not the first factor, the value-added, that’s driving things, it’s a collective action problem. People go to college to have better signals than those that don’t. Then, if everyone goes to college, you’ll have to start going to grad school, or you will have to go to a better college. And so the line doesn’t change. It’s just that everybody is spending more money and time to maintain their place in it.