Is Higher Education Worth It?

Peter Thiel claims were in a higher education bubble here. In some ways he’s right. Seth Godin writes about the higher education meltdown here. In some ways, he too is right. NPR host, Korva Coleman, discusses the debt burdens of a college education with a panel of people from academia here. Much of what the guests on the program say is also spot on. Will Hunting famously said, “you dropped 150 grand on a fuckin’ education you could have got for a dollar fifty in late charges at the public library!” in the movie Good Will Hunting. And despite his Bostonian crassness, what he says smacks of truth as well.

What all of these people have alluded to is that a college education is not the golden ticket to financial success in life that it was once thought to be. In other words, it has become a poor investment decision for a growing number of people. There are two main reasons for that: the economics of learning have changed and college degrees are too easy to get. For these reasons, I don’t believe that everyone needs a formal college education, particularly the working business class.

In the past, much of the worlds knowledge was locked up in the libraries of elite universities and colleges. That has changed. Knowledge is no longer stored in the treasure chests of formal institutions. To use economic parlance, the cost of accessing information has decreased. Information is bountiful now and the cost of accessing knowledge (aside from an initial intellectual curiosity) for anyone who has an internet connection is virtually nil. A formal educational institution is thus no longer necessary to acquire knowledge or to learn most practical business skills.

Let’s consider an example as to how the economics of learning have changed. 100 years ago there was probably a greater benefit to memorizing the Periodic Table of Elements for some jobs. In fact, memorizing the table probably made you more valuable in that specific job market since not everyone had easy access to that knowledge in their memories. I, however, just did a Google search and within less than 10 seconds I came back with this chart as posted by the Los Alamos National Laboratory which I think most people would agree is a credible source. Again, in economic lingo, there is a relatively low cost alternative to memorizing information since we can easily access it on the web almost anytime and anywhere. Consequently, the ability to memorize and then regurgitate obscure information is not as valuable now as it may have been in the past.

Tests that often require nothing more than memorization are, however, exactly what most educational institutions use to measure how much you learned or how valuable you may be to an employer. How does this ability to perform well on these types of tests indicate anything of importance to potential employers? Strangely, there is one way; it displays status over other poorer test taking peers.

This status is exactly what makes a college degree valuable. A college degree, then, is merely a signaling mechanism to tell the world that you are supposedly smart (whatever that means) and that you worked hard enough to get something that not everyone is capable of doing. What happens to the signaling mechanism when everyone graduates from college? You guessed it, a degree becomes worthless as a signal if everyone can get it. Test taking skills certainly display a type of status, but to confuse this with education or to correlate it with ones future career success is a mistake. Yes, I’m actually suggesting that the ability to take tests doesn’t tell you much about a persons intelligence or their potentiality as an excellent employee or entrepreneur. Formal education institutions, however, have a financial incentive for you to believe otherwise.

Nearly everyone has heard some variation of the statistic that college graduates earn more over their lifetime than do non-college graduates on average. While that may be true, I think this is an abuse of statistics. Some graduates will earn significantly more due to their degrees and for some it will not make a difference. Consider this: twelve percent of mail carriers have an undergraduate degree. I’m pretty sure you don’t need a college degree to deliver mail. If you consider formal education an investment and you become a mailman, you’re not going to receive a return (at least in dollars) on your investment and you’ll be stuck with a pile of debt to boot. Although most of what I’m talking about relates to undergraduates, there are plenty of PhD’s working as janitors, driving cabs, and selling hot dogs in America.

I’m certainly not suggesting that working class citizens shouldn’t be educated, but rather, I’m suggesting that we shouldn’t confuse an expensive formal education with being educated. Telling kids across the board to go to college, as many politicians do, because they’ll earn more money is a terrible piece of advice. Aside from a small handful professions most people need no formal educational credentials to do their job well and will not necessarily make any more money for merely having a piece of paper with the words “business administration” written on it.

There are several things that can make a college experience valuable outside of the classroom. Personal relationships, business connections, mentorships, and personal growth all come to mind. I think those things are very important, but there are other much cheaper ways to obtain them. If you want to be educated, there is no rule that says you have to pay thousands of dollars in order to read Plato’s The Republic. There is a vast amount of culture that can be consumed online and at libraries for free. Here’s an optimistic thought: it’s far easier and cheaper than ever to be an educated and actively engaged citizen of the world for almost anyone living in a developed country.

A memorable line from Judge Smails in Caddyshack is that “the world needs ditch diggers, too.” Public officials are doing the metaphorical ditch diggers and business people of America a huge disservice when they preach to them to take on unnecessary debt by going to college. Why do we continue to propagate the myth that everyone should go to college then? Clearly, not everyone should go to college and to suggest otherwise is to demonstrate a failure to understand what the educational system is really about. As I mentioned, intellectual curiosity and an internet connection are the two most important things needed to acquire knowledge today. The other benefits (aside from the status) that come from attending college can be found elsewhere by anyone with a lick of ambition. Furthermore, when the signaling mechanism of college is destroyed the elites will find other ways to signal that they are elites and everyone will remain the same relative position only with more debt!


7 Comments on “Is Higher Education Worth It?”

  1. […] “Is Higher Education Worth It?“ […]

  2. Alexander S Farley says:

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  3. […] an education really ought to provide us. I’ve shared some of my thoughts on education before: here, here, and here. Education is not immune to economic analysis, but, before running a cost-benefit […]

  4. […] education (“WARNING: This Degree May Make You No Better Off Financially” and “Is Higher Education Worth It?“). Essentially, I argued that many types of college degrees are losing value as a signalling […]

  5. Memorizing the periodic table is not worth. 

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