Monday, May 13, 2013

On the Worth of College

In the past week or so, there has been a lot of media discussion about whether college is worth it.  I have more to say on the topic than just one blog post can muster, and this is the first post where I try to make sense of what has been said in the media.

A key piece of the media discussion is the announcement of Bruce Bennett's new book, "Is College Worth It?" in which he contends that only 150/3500 colleges are worth the investment.  Here's a quote from a recent article:
"It does not seem that much learning goes on in higher education," Bennett told Fox News's Sean Hannity Monday night. 
"Listen, we have some of the world's greatest colleges and universities. But at the same time, it is true that many students go to college, spend $15,000-$50,000 a year in tuition; halfway through, half of them drop out, about 46 percent drop out. When they graduate, the class of 2011, for example, half of them are unemployed and half of that half is underemployed, and they've got a lot of debt."
Bennett arrives at his conclusion that college is (generally) not worth it by computing rates of return for the typical graduate of each college.  Those with a positive rate of return are worth it, those with a negative rate of return are not. 

In a separate opinion article, Bennett softens the point, but then reveals the flaw in a simple rate of return calculation.
Ultimately, a college education can still be a good investment, but it is not necessarily the right choice for everyone.

Students need to make smart decisions about their capacity for academic work, the job prospects for their major, and how they will pay for their education.

Students should make sure it’s really worth it based on their interests and life goals before taking the plunge.
I appreciate Bennett's sentiment that a diploma is not worth it for everyone (it is not), but this excerpt reveals a critical assumption behind his work: students can know whether a college degree is for them before college.  This is a too-simplistic view on the value of college, and it instills too narrow of an approach to attending college.  Namely, students should not go to college with their minds made up.

A big part of the value of going to college is "finding oneself."  To take a personal example, I went to college to study business and computer science because those were the hot / high return fields at the time, and of course, I liked computers.  I was naive with no idea what I was doing with these fields, and after a semester, I had serious doubts about whether they were for me.  

Fortunately for me, I did not need to have my mind made up in advance.  College was a time for exploration, for thinking about the future, for discovering what kind of work I would do, and for finding myself.  I found myself in my second semester at Montana State in my Honors Economics course.  At that time, I decided that I would study economics (with the intention of pursuing a Ph.D. someday) instead of business/computer science.

Backing out of this personal experience, my experience of finding myself is different from others.  For other students, taking the economics class could be what convinced them that economics is not for them, and they go on to study psychology instead.  Still others could use that same economics class to learn that getting a college degree is not worth it.  Regardless, none of these students know what path is optimal going into the class, and that is critical.  A huge part of the value of college its option value: i.e., finding out (a) is a diploma is worth it for me? (b) what kind of diploma is worth it for me?  

Even if the answer is that the student should drop out and do something else, going to college is valuable because it helps the student figure this out.  Viewed with the appropriate amount of uncertainty (both on aptitude and interest), it is unrealistic to start from the assumption that it is possible to determine whether college is worth it before taking the plunge.

Put another way, it is not necessarily a mistake to have taken a risk and lost. If there was a significant upside to the gamble, the fact that people experienced a significant downside to taking the gamble is not evidence that the gamble was not worth it.


  1. The way I see it there are about three groups of college students:

    1. Those who don't care and are at best indifferent about college. They are often pushed to go to college by their parents, environment, friends, etc. These students are usually not college material and have high drop-out rates. They would be much better off financially (both in the short and the long run) with learning a trade at a community college. And they would probably enjoy this a lot more.

    2. Those who only go to college to get a job afterwards. They don't really learn anything useful in college, they tend to take easy classes so that they get a degree. As businesses tend to require college education for even the most basic (mostly office) jobs nowadays, anyone who wants a white collar position with a decent pay would have to go to college (even though most of these jobs can be done with high school education and experience). These people shouldn't be in college, either. More vocational oriented programs could be set up for them at community colleges, that are at most 2 years in length. This should get anyone ready for an office job after high school.

    3. Those who do care about college and learning and are not only there because they want a career but also because they care about the courses they take. Now, college was originally invented for these people.

    About finding oneself: I think in 99% of the cases it is easy to tell whether a student is college material or not (based on high school performance or the SATs). So it's not hard at all to put people in one of the above three categories after high school. Consequently, not everyone needs to go to college to find themselves.

    Unforunately, colleges work more and more like businesses nowadays and they're not necessarily doing what's good for society but what's good for them. And what's good for them is the masses going to college, so that's the approach they're gonna promote. This is one of those situations where, as much as it may be hard to admit, the government must step in to promote desirable outcomes.

    On this last point, see:

    1. Thanks for the comments.

      It is a fair point that there is a large amount of apathy toward the academic purpose of college. It isn't a good idea for people who are apathetic about college to attend, and I wouldn't condone parents pushing students to go to college at any cost.

      As I tried to make clear in the original post, half of my "finding oneself" point is about dropouts. People talk about dropping out as if it is a bad thing, but my view is that the dropout learned that he wasn't college material. Maybe (as you suggest) there's a surefire way to know who isn't college material before college, but sometimes the best way to learn that is to try and fail.

      In your three categories, it's true that there are clear cut cases, but it is unrealistic to assert that you could have 99 percent success in knowing whether someone is college material just by observing the population of high school students who desire to go to college. If you could have that kind of success, I suspect you could make quite the living at it.

      But, I'm doubtful that you'll be successful in predicting who will make it with that level of confidence. On the administrative side, applications and admissions have way too much noise to determine whether a student is really cut out for college. On the student side, students and parents have way too little information to make a certain choice. This is because high schools do not typically expose the median college applicant to what classes/topics are covered in college (nor should they). Students and parents, thus, are mostly in the dark about the student's preferences for topics, and fields of study (except for the field the parent took, but then we're talking about parents pushing their kids to school to study what they studied, not something I would recommend).

      Regarding group 2, you're making a different argument about education as inefficient signaling. Sure, there's some of this and it is wasteful (relative to the economic ideal where no one invests in education for signaling purposes), but how do you propose to fix the equilibrium? Employers are always going to want to sort out who is willing to work hard for "a job" as part of the requirement for their positions. For those diplomas that don't add value, the reason that employers require a college education is that it is useful to screen out the bad types (i.e., people who can't go to school for 4 years to get a degree). This is an incredible benefit to employers out there. Moreover, it is likely that if we banned Group 2 from college (I'm still not sure how it is possible to separately identify them), some other form of wasteful signaling would step in to take its place. I don't think community college is enough -- merely by employers' current insistence on a 4-year degree.

      And, all of this assumes that professors are not good enough to teach Group 2 students something useful while they're required to take their courses. I won't belabor this, but I also find this unrealistic.

      Lastly, your point about consumption versus investment purposes of higher education is a good one. I think that people go to college as a consumption good as much as an investment good, but these things are not mutually exclusive, nor are they confined to the classroom, nor are they always to be frowned upon. College is a time where students build networks and find life partners, as well as learn things in the classroom. This can be valuable long term.

      We can always come up with amusing examples of college courses that are offered, but sometimes students enjoy college courses and experiences that are actually "good for them." That's not to say that there is not bad stuff going on in college, but what I see portrayed in the media and reflected in your response to my post only tells one side of the story.

  2. This is what I had been speaking about. Good that you brought it up. The drop-outs and the thoughtlessness of the federal government has been costing us, the taxpayers for years. Don’t you think that the federal grants for the students should also take the merit and performance of the student into account, instead of giving out assistance just on the basis of needs? Lack of definite and sensible eligibility structure turns a lot of federal resources into waste. Not only does this result in a substantial debt burden for the youths, but also affects the mindset of the student, which consequently affects the economy. Lack of competitive nature, sense of failure and rejection, unemployment, sizeable student loan hinders their growth and development and that of the nation as well.


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