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.

My College Admissions Decision: Claremont McKenna College


In fall ’07 I will start at Claremont McKenna College!

What is Claremont McKenna College?
CMC is a small, liberal arts college in Southern California. Statistically, it is one of the most selective colleges in the country and, with Pomona College, represents the west coast in the top tier of liberal arts colleges. But the beauty of CMC is its qualitative characteristics.

Unlike many elite liberal arts colleges which all blend together, CMC is distinctive. It has carved out a niche in higher education and, frankly, dominates it. Claremont is all about leadership, government, business, and public policy. The College embraces "life entrepreneurship" more than any other school I visited.

Why Did I Choose Claremont?

First, I believe in the liberal arts college model. Second, the College’s mission fits my life mission perfectly. Third, I love California. Fourth, my Dad had a great experience at CMC. Finally, I had a good visit — the students I stayed with were impressive. My host was an undergraduate doing deep research on the WTO and Taiwan (he chose CMC over UC Berkeley for its economics program), his good friend was involved in political life (he chose CMC over Georgetown for its personalized approach within the famous government department). Also during my visit, the professor of a class I audited asked me if I wanted to have lunch afterwards. She cared.

The Consortia — Claremont McKenna is literally across the street from Pomona College, Pitzer College, Scripps College, Harvey Mudd College, Claremont Graduate University, and a variety of research institutes. All the colleges share resources which means students can take classes at any of the colleges. This means CMC, for example, can have a government department of 40 professors — an insane number given the 2,000 students at the school — and not offer any arts or engineering. Students who want art and engineering take their classes at Pomona or Harvey Mudd (arguably the best liberal arts college in the country for engineering students). Moreover, while you receive the personal attention of a liberal arts education, you are in a town with over 6,000 students, faculty and staff of 3,300, and 2,500 total courses. The Claremont Colleges is perhaps the only place in the country where you can get the best of both worlds in such close proximity — personal attention on the one hand, and the resources and feeling of a university on the other.

Curricular Focus — Among the top 10 liberal arts colleges there is little to distinguish a college like Swarthmore from Amherst, or Carlton from Pomona. CMC has taken a different approach. They have branded themselves as a school devoted to educating leaders. The Kravis Leadership Institute, the Drucker School of Business, and a variety of other programs on campus promote a theme of leadership, business, exploration, and impact.

Peter Drucker — Perhaps the greatest management thinker of our time, Peter Drucker taught at Claremont for the last 40 years of his life. Hence the Drucker School of Business; not a terribly prestigious business school, but an energetic one, with expert faculty, research output, and high level business courses.

The Government Department — After Harry Jaffa, a protege of Leo Strauss at the University of Chicago, went to Claremont and founded his "Sousa" school of Straussianism, the Claremont government department has attained national profile. As the chair of the dept wrote to me, "CMC’s government department is the largest and wisest of any liberal arts college in the country." One Government major actually dropped out of CMC a couple years ago to be George W. Bush’s personal secretary (he’s now going to be the first HBS student who doesn’t have an undergrad degree).

Faculty — You probably haven’t heard of many of Claremont’s professors. After all, they focus on teaching undergraduates, not appearing on CNN. This is fine by me — I want a professor who I can have dinner with! That said, there are a couple people on-campus who fire me up by name alone. David Foster Wallace, one of the best American writers in his generation, teaches at Pomona. Mihaly Csikszentmihalyi, author of Flow: The Psychology of the Optimal Experience, one of my all time favorite books and a landmark in positive psychology, teaches at Claremont Graduate University. A friend from my high school is a freshman at CMC and his government professor is Charles Kesler, the famous head of the Claremont Institute and editor of the Claremont Review of Books, a conservative counterweight to the New York Review of Books. His economics professor served in an advisory capacity to the current Bush administration. (The faculty and student political split is 50/50 liberal and conservative.)

Athenaeum — CMC hosts guest speakers for lunch and dinner four days a week, every single week of the academic year. Definitely the most guest speakers in an organized fashion than any other liberal arts college, and probably most large universities too. Top speakers — Janet Reno, George Will, etc — are invited for dinner inside the Athenaeum dining room. You must make reservations, wear nice clothes, and not only listen to the speaker but discuss the relevant issue at your table. This is one of CMC’s shining points and given my propensity to meet new people and discuss all sorts of issues, it suits me perfectly.

Los Angeles — Even as a San Franciscan I can admit that Los Angeles is a tremendous city. My company Comcate works with many cities in LA County, including a big contract with the City of Pomona, CA. Claremont is an hour east of LA.

    • Weather — Incredible weather. BBQs and sandals. I’m told Claremont is sheltered a bit from the smog.
    • Platform — Great city for me to operate on. Tons of interesting people and companies.
    • VC/Entrepreneurship — Southern California may soon eclipse Boston as the #2 most active VC region in the country, behind Silicon Valley
    • Brains — UCLA, USC, Occidental, California Institute of Technology, and the Claremont Colleges all make Los Angeles full of bright students.
    • In-N-Out Burger — SoCal is home to the original In-N-Out Burger location, and there are two in the City of Pomona alone.

Networking — Because so many CMC grads go into business or the professions, the network of CMC alumni is incredible for a small college. I’m not even at the college yet and I’ve already tapped into it.  Every day I find someone new who’s a CMC alum — Patrick Lencioni, author of the popular business fable books, or Jonathan Rosenberg, one of the top Google executives.

Henry Kravis – Kravis is one of the most successful investment banker in U.S. history, with a legacy that will stand alongside J.P. Morgan as one of the titans in American finance, says Kravis, a CMC alumnus, is perhaps Claremont’s most notable patron. I hope to develop a relationship with him while I’m there.

If you don’t know much about Claremont, don’t worry, that will change over the next five years!

Tyler Cowen on My College Process

One of my intellectual heroes, Tyler Cowen, a professor and "Economic Scene" columnist in the New York Times, has some kind words and observations on my college admissions experiences on his must-read blog. Thanks, Tyler.

Tyler’s breadth of interests makes him one of the most provocative public intellectuals. Here’s my review of his book Creative Destruction, here’s a long debate I hosted on independent book stores based on one of Tyler’s articles, here are my notes from Tyler’s talk in Zurich this past summer.

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College Admissions Decision: Part V: Decision Time

See Parts I , II , III ,and IV in my series revealing where I’ll be going to college.

In the time between January 1 and April 1, when you hear back from schools, I reflected on what I’d want out of four years of college. Some things that came to mind included: a) study topics I can’t study anywhere else, b) form close relationships with brilliant teachers, c) form close relationships with students who can be friends for life, and maybe business partners, and d) increase my exposure to randomness.

On April 1st I got a handful of thick envelopes, and some thin ones too. The responses were all over the map, as predicted. Neither my counselor nor I knew what to expect, given my unique file. It all depended on how much the school appreciated what I did with my time the first two years of high school.

I was thrilled to receive acceptances at colleges which excited me, and in mid April took a trip to visit three schools: one in east Chicago, upstate New York, and east Los Angeles county. After returning from my three visits, I returned to San Francisco with a smile.

When I told my Jon, my counselor, where I’d decided to go, he answered with a grin, "Listen Ben, I don’t tell anyone this, but I’m going to tell you. Usually I say there’s no such thing as a perfect fit, but in this case I’m wrong. This is a perfect fit for you."

All around me my friends were hearing good news and bad news. Some people got screwed, some people got lucky, some people got what they deserved. Some people treated it as a pivotal turning point in their life; others, like me, treated it as another meaningful event nestled in a mosaic of cool, interesting twists and turns.

Since I had decided to attend a college that intrigued me, I now had to decide about deferral. The notion of Real Life University always intrigued me – especially the travel component – so I decided to defer my admission for one year so I could travel, work, and publish my book.

Tomorrow: Where I’m going and why

College Admissions Decision Part IV: Visiting Colleges and Writing My Application

See Parts I and II and III in my series revealing where I’ll be going to college.

I tried to improve my grades. The fall of my senior year I earned a 3.97 GPA, bumping my cumulative GPA to a 2.99.

Heartened by my improvement, I visited a range of colleges. I visited liberal arts colleges. These kinds of schools are the gem of United States higher ed. Private liberal arts colleges only serve undergraduates, are committed to a broad base of learning, and boast a high student to faculty ratio. My whole family has been educated in liberal arts colleges (Smith, Claremont, Amherst, and Middlebury) and all had tremendous experiences. I also visited large research universities. In a large university there are more resources, more people, more organizations, and more happening, but less face time with professors, a less personal atmosphere, and sometimes overwhelming living situations.

I did not look at undergraduate business programs. I have many real world business experiences and, besides accounting, classroom work wouldn’t enrich it much I think.

I did consider the overall entrepreneurial culture of a college campus. I want to be around kids who dream big and aren’t ashamed of to say it. I considered how passionately students took to the "life of the mind". I talked to professors, studied their programs, and pondered their probable availability for one-on-one dinners and their ability to awaken a classroom. I considered the location and weather of the college. Having lived in San Francisco my whole life, I haven’t seen snow for more than a few days at a time. I like moderate-to-warm weather. Finally, I considered the college’s alumni network – its vibrancy and distribution of careers.

In my application I had 500 words to tell the college about myself. My personal "character" is where I had to shine, given my poor grades. I wrote an essay about "life entrepreneurship," using a Joan Didion quote as a jumping off point. I had immense difficulty crafting an essay that would communicate my four crazy years of high school / Silicon Valley. My (private) attitude was, "Some college admissions people will get it, some won’t, and that’s how it goes."

Some schools, especially small colleges, still do personal interviews. At every school but one where I interviewed, I got in. Given my experience a) interviewing candidates at my own company, b) interacting with adults, c) communicating a sales pitch, I always kicked butt in my interviews.

Throughout all this I talked to adult friends and school peers. I learned early on that books and articles about higher education were fairly useful while the random anecdote by an bachelor-toting adult was usually not. This, of course, is the fascinating influence: everyone who’s gone to college (about 27% of America) seems to have an opinion about colleges and admissions. The problem is the world’s changed. Also, as time passes, cognitive dissonance does wonders. College grads think about those four, long, incredibly expensive years in a way that’s kind on the brain. Sometimes they repeat nice-sounding catch phrases like, "College is all about learning how to think" or "It’s not about the college you go to, it’s about what you get out of it." (There’s some truth in both.) But – but! – all this being said, several adult friends really illuminated this time in my life with characteristic wit, hindsight, and humor, and I appreciate that.

On January 1st I submitted my applications online to a dozen schools and hoped for the best!