The Costs and Benefits of Going to College – Is It Worth It?

Bryan Caplan, Arnold Kling, and Will Wilkinson have been discussing why people go to college, and whether it’s actually worth the exorbitant cost (for private colleges at least).

The conversation started with Gary Becker‘s and Kevin Murphy’s article in The American which argues that we shouldn’t be too concerned with rising income inequality since it reflects the "rising payoff for a college education and other skills".

Cato’s Will Wilkinson, who writes wonderfully and critically about happiness research, guest blogs on The Economist site and says:

Becker and Murphy go on to argue that "policymakers and the pub­lic should focus attention on how to raise the fraction of American youth who complete high school and then go on for a college education." OK. But I know my friend Bryan Caplan, who is working on a book about why " there is too much education going on," would disagree. Bryan argues that university diplomas mostly function to signal prior competence, and that time and money spent in school is largely wasted. If he’s right, Becker and Murphy’s emphasis may be misguided, and I suspect Bryan may in fact be right, despite the fact that he’s never won a Nobel or Clark prize and wears shorts in the winter. In which case it strikes me that there is a huge entrepreneurial opportunity for whomever can come up with an alternative scheme of credible human capital certification. Who cares if people develop their skills by attending classes at their local college, listening to free lectures from MIT, learning on the job, or by sitting in their mom’s basement gaining mad hacking skilz? I don’t. But employers do.

Arnold Kling doesn’t buy the signalling story — that the main value of going to college is to signal prior competence:

If it costs $200,000 for a person to go to an elite private school, and this does nothing other than provide a signal of the individual’s ability, then there is a whale of an unexploited profit opportunity sitting out there.

My current view of college is that it is a bundle of services that is fairly difficult to unbundle. Some of it is education. Some of it is selection/signalling. A lot of it is social–people aged 18-22 clustering together.

Mostly, though, I think of going to college as a cultural ritual, like a Bar Mitzvah, a confirmation, or a wedding. These rituals allow parents to impart tribal values and tribal loyalty to their children. Participating in the ritual reinforces your membership in the upper and/or upper-middle class tribe. With all of these rituals, including college, it is the parents, even more than the children, who are focused on conformity to peer expectations.

Bryan Caplan then poses this interesting question:

If you think that entrepreneurs can easily find a cheaper way to certify worker quality, why can’t entrepreneurs easily find a cheaper way to reinforce membership in the "upper and/or upper-middle class tribe"?

I suspect over time — by the time I’m supposed to be a parent — there will be new and cheaper social rituals we will put our kids through.

All the above is fascinating discussion. What made me decide to ditch the idea of "Real Life University" and enroll in a four-year, private institution? Mainly this: the socialization of 18-22 year olds clustering together. I think this is valuable from an emotional development perspective and from a business networking perspective down the road. Is it worth the cost? For some, maybe. For me, I’m hopeful but less sure, since the opportunity cost of being chained down in one place for four years is so great.

Actual education wasn’t a factor for me. I think most people agree that there are many ways you can acquire knowledge and be intellectually stimulated. The cost of a private college is not close to commensurate with the actual knowledge it dispenses…Notwithstanding the cognitive dissonance all college grads endure ("All that money had to result in something").

     

Signalling wasn’t a huge factor, either. My personal brand already signals basic competence and intelligence. And I have no interest in signalling conscientiousness and conformity, because I’m an entrepreneur, though I agree with Bryan’s point there.

Summation: I believe that going to college will increasingly be seen as a poor investment as self-education becomes more viable (thus eliminating the knowledge a college dispenses), personally signalling intelligence and character is made easier through new web-enabled modes of self-expression (thus diminishing the signalling benefit of a degree), and entrepreneurs invent new ways for young people to socialize and upper-class parents to satisfy their status hungers.

We’ll see if I last all four years.

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