
Greenspun: Let's stop investing in our kids - nostrademons
http://blogs.law.harvard.edu/philg/2010/06/12/americans-lets-stop-investing-in-our-kids/
======
houseabsolute
The article pretends

\- That the current salaries of recent college graduates represent their
probable average output over their lifetime. This is absurd for reasons that I
hope I don't need to explain to all you startup founders.

\- That the salary of a graduate is a total representation of that person's
value to society (and, transitively, of their education). This is wrong even
if you think the total value of an education is in employment. Economics
teaches us that for all voluntary economic transactions there are producer and
consumer surpluses. It must therefore be the case that an employed person's
value to their employer is at least the salary the person is paid. And as
cynical as I am about college education sometimes, even I don't believe that
the complete value of the education is in its utility for the labor market.

\- That there is a reliable way to make a ten percent return on investment
overseas. Not as far as I've been able to find, and if you can find it you
could probably make a lot of money selling the information to a big player in
the American bond market.

\- And that the normal personal investment into a college education is really
$300,000. This is anti-factual. It is probably also wrong that each marginal
elementary schooler costs $200,000, but I can't say for sure about that.

As rhetoric, this article plays well. As honest observation of the American
educational system, it's a miserable failure.

~~~
mattmcknight
What this article does successfully through hyperbole is to remind us to add
opportunity costs into evaluating the value of an education. Your quibbles
about the obviously rough numbers don't subtract much from that key point. It
obviously doesn't make sense to abandon education, but it also obviously
doesn't make sense to pay $500k for it.

"That the current salaries of recent college graduates represent their
probable average output over their lifetime." It doesn't represent that at
all. It is saying that the value due to education can be roughly approximated
by the starting salary. The gains from there are then more based on
experience/work, not the education. Of course, you ignore the money made while
you would have been in school. You also ignore the periods of unemployment.

"I don't believe that the complete value of the education is in its utility
for the labor market." The fundamental question though is how much we should
pay for it. I could read books, do "home work", and watch MIT lectures on the
internet for a lower price. Many people are looking for ROI.

"That there is a reliable way to make a ten percent return on investment
overseas." A rough number, but definitely too high. The world is over-invested
anyway as a result of too much money having been created.

"And that the normal personal investment into a college education is really
$300,000. This is anti-factual. It is probably also wrong that each marginal
elementary schooler costs $200,000, but I can't say for sure about that." I
don't think it says personal investment, the distributed cost counts too. It
costs about 20k per year here for elementary school and 25k for high school,
to be conservative. You don't need to look at the marginal costs here, because
they are your costs.

~~~
btilly
_"That the current salaries of recent college graduates represent their
probable average output over their lifetime." It doesn't represent that at
all. It is saying that the value due to education can be roughly approximated
by the starting salary. The gains from there are then more based on
experience/work, not the education. Of course, you ignore the money made while
you would have been in school. You also ignore the periods of unemployment._

That is indeed what it says, but that reasoning is wrong.

He's commenting that most of these expensive kids are unemployed and therefore
make nothing. That is due to the economy. However the first job they get is
likely to be at a higher salary than non-college students, and a college
degree enjoys a permanent advantage throughout life in getting jobs and
getting raises.

Even several years out of college, many employers will look at the presence of
a degree when hiring. And it is an advantage again if you need to switch
careers. (Which is becoming very common.)

~~~
wyclif
_And it [a college degree] is an advantage again if you need to switch
careers. (Which is becoming very common.)_

But where's the educational correlation between a degree in a specific
discipline and a change to what is presumably a different discipline? If I
have a degree in Literature, I'm an editor at a publishing firm, and I get
fired and then get a job in, say, the biological sciences, how is my degree
intrinsically an advantage other than as a barrier to entry (a weeding-out
tool) to the professional class, which is not purely educational in nature?

~~~
btilly
You've put your finger on an important issue. For the person with a degree,
there is an advantage in passing that barrier to entry. But why is that
barrier to entry there?

From the point of view of the employer, a degree indicates that the possessor
has, among other things, a certain level of intelligence, literacy (not a
small deal in a country where over half the country is functionally
illiterate!), experience in learning, general background, work ethic, and
socio-economic status. It is therefore a somewhat useful filter to apply for
many professions.

Of course most of those traits have nothing to do with what you actually
_learned_ in university. And there certainly are plenty of successful people
with all of those traits who did not bother with university. So even though I
believe that for most people, education is worthwhile to that person, I'm far
less certain that society as a whole benefits much from all of the money spent
on higher education. (And I become even less certain when I look at how
wasteful the process has become. Costs have been going up faster than
inflation for decades, with no apparent reason than that everyone in the
process knows that they are free to raise costs by that much, and it is always
easier to spend more money than it is to spend less.)

------
patrickgzill
I think HN has missed one of Greenspun's points - that we always talk about
"investing in our children's future" but never actually consider whether the
investment (usually of public money, i.e. tax dollars for K-12, then crushing
debt from the parents for college) actually stands the test of financial
sense.

~~~
sprout
No, I think that's specifically the point I take issue with. An educated
polity is a social necessity in a democracy - and we are failing at creating
an educated polity.

So there's no question to me that educating people stands the test of
financial sense. It's a question apart from finance, and essential to our
future.

However, I do think it's fair to ask whether the money being spent is more
than is necessary to properly educate our citizens.

------
Destruct1
a) He compares a 300k education over 4 yeards with an average master degree
income. I have no idea about prices in the US but i would be very surprised if
the decent, but not stellar schools have a 50k/year tuition (using 100k as
living expenses).

b) We have the same discussion in germany where universities are free. The
general consensus about getting a degree seems to be that it is barely worth
it (considering opportunity cost and taxes on higher income).

c) I think we see a shift in the value of college degrees and need to change
our mindset. In the old days only a small percentage of the population had a
degree, yielding a guaranteed job and good career opportunities. Today nearly
everybody has a degree and therefore the value goes down. I think people have
to learn that a degree is not the road to riches and that they actually have
to work and learn to get a good job. Another myth is this: I can have the same
job my father had and he didnt need a college degree. That is just plain
wrong. To do the same job your father did, you need a much higher education
today. Accountant with a short certificate in the old days become B.A. in
economics today. Simple configuration which might be done by a clever
industrial mechanic in the 60s need a complete engineer degree today.

~~~
teaspoon
The $300k includes opportunity cost. That means it's tuition plus living cost
plus four years of whatever after-tax salary you can make with a high school
degree.

------
younata
Or, we just learn to be more frugal when it comes to higher education. It
doesn't matter at all where I get my diploma from, I just need one to get
anywhere. If I can manage to go to a public college and pay <10k a year for
it, that's awesome. If I can get other people, such as scholarship places, or
the university itself, to give me enough money, I can essentially get a "free"
higher education.

I have a good friend whose family is paying nothing for him to attend UCLA.
Personally, I'm not so lucky/dilligent about applying for scholarships.

~~~
gaius
The value of a Harvard (or any elite college) education is not in what you
learn but in the brand name. _That_ is what people are willing to pay a
fortune for. And the brand name does have a value associated with it - it cuts
down on the friction of getting through the initial stages to an interview at
which a hiring decision will be made, for example. Is this right or wrong?
Well, if historically graduates from a certain college have been a safe bet,
then there is value for an organization in continuing to hire from there (even
if only in time saved). If historically access to an alumni network is
valuable, then that has value. Etc, etc.

That's not to say they don't offer a great education, and a great experience
of being immersed in a world where everyone is smart and ambitious for a few
years. Similarly that immersion is part of the education. But that is another
little secret: elite colleges only admit students who would succeed
regardless.

I attended an elite college for undergrad (which one doesn't matter) and
viewed from that side, it's hard to see if it actually made a difference in my
career vs any college. I've never explicitly seen an interviewer be impressed
by it. But behind the scenes, for example, I don't see if there were a hundred
applicants and mine made it through the initial screening because of that.

~~~
rdtsc
In some fields the value should be better determined by one's previous work
(the portfolio). That has traditionally been true for designers and artist for
example, but today it should also be true for software developers.

There are so many open source projects that companies should be asked "what
open source project have you contributed to?" and "show and explain that code
to me".

Basically that is what got me my job. My GPA was high and I worked my butt off
for 5 years to get it, but it was a small open source project that got noticed
and used as the basis of selection.

~~~
gaius
I agree, and 5 years out of college no-one should care where you went, or at
least, care very little compared to what you did in the meantime. But like I
say, you don't get to see what happens behind the scenes. The truth is, it's
human nature to seek out the pre-qualified, and all other things being equal
(as they are with a fresh graduate) diploma + brand will always beat diploma
alone.

It's interesting you mention open source. Sometimes I interview kids who claim
x years experience and what they mean is, "I've been programming since I was 8
years old". Which is great but experience here means a) stuff you were paid to
do or b) in a well-known open source package (e.g. Apache). The experience a
company is interested in is experience not of _coding_ but of "transforming a
spec into a product".

------
lr
America (and we are not alone) is in a race to the bottom. Just like Coke and
Pepsi spend more an more each year on advertising,-- because the other does
the same -- doesn’t mean they are making that much more in profits each year.
The same can be said for education: Costly perks need to be added because “the
other guy is doing it”, and in the end, we just pay more for (mostly) what we
had before. Seriously, has basic calculus changed so much in 30 years?

~~~
dgordon
I would hope most students learn a lot more than basic calculus in four years
of college.

------
cageface
I went to public schools through high school and then, on scholarship, to the
local public university. I doubt my family "invested" more than $10k in my
entire education. Whatever it cost, it's certainly repaid itself many times
over since then.

The great thing about coding for a living is that most companies care more
about what you can do than the name on your diploma.

------
oliveoil
How about an added value in a well educated person. Like he or she feels
better about themselves, is more likely to contribute to society with things
as art (or open source software) as well as more likely to succeed starting a
new business and bring in even more of that MONEY.

------
known
In 1996, Ireland made college education basically free, creating an even more
educated work force.
[http://www.nytimes.com/2005/06/29/opinion/29friedman.html?_r...](http://www.nytimes.com/2005/06/29/opinion/29friedman.html?_r=1&pagewanted=print)

------
known
Why not send American kids to China or India for education?

------
blue1
So the only reason for education is to produce more money?

------
houseabsolute
I can't take an article seriously that claims we'd be better off without
doctors and hospitals. Whatever fallacy that's called, I'm definitely guilty.

~~~
pyre
He's showing that things are screwed up. We're spending _too_ much on
education for what we are getting in return. He's claiming that the system is
wholly inefficient. He's just extending that to the health care system in that
one-liner.

More generally: "For the amount of money that we are putting into <blank>, we
should be getting more value out of it."

~~~
swombat
The article _is_ basically claiming that if a doctor earns $100k a year, and
costs, say, $1m in funds to be able to complete his or her extended studies
(that take many years), then creating that doctor is not a worthwhile
investment for parents or for society.

That's wrong on so many levels that I won't even bother to argue with it.

~~~
anamax
> The article is basically claiming that if a {knowledge} earns ${number}
> year, and costs, say, ${bigger_number} in funds to be able to complete his
> or her extended studies (that take many years), then creating that notfunh
> is not a worthwhile investment for parents or for society.

For a given value of {knowledge}, there are values of {number} and {bigger
number} for which that statement is true. There are other values for which it
is false.

Suppose, for example, it cost $1b to train a straw basketweaver and society
was only willing to pay $10k for said basketweaver's output. That's not a
worthwhile investment. And substituting doctor for basketweaver doesn't much
change things.

Absent force, salary/compensation doesn't capture all of the value that
society places on an occupation, but it isn't hugely wrong either.

~~~
anamax
> For a given value of {knowledge}, there are values of {number} and {bigger
> number} for which that statement is true. There are other values for which
> it is false.

Actually, there are values of {number} and {bigger number} for which that
statement is true regardless of the value of {knowledge}.

I suspect that there are values for which it is always false as well.

------
antidaily
Invest in promising startups not Chinese Pizza Huts, goddammit!

------
ilkhd2
Read the article. Visited link to Wikipedia article? Daymit, how you can
SURVIVE on 35K a year in USA??? Maybe somewhere in Mississippi, but not in
North USA. Still, you'll have to eat random crap from 7-11 and macdonalds...

~~~
blehn
Really, it's not that hard. Conservative estimates:

Wages: 35k

Taxes: 10.5k

Rent: 1000/mo = 12k

Utilities: 200/mo = 2.4k

Transportation (car): 200/mo+200/mo = 4.8k

Food: 400/mo = 4.8k

Total: 34.5k

Get a roommate, use public transportation, get rid of TV, make your own meals,
and you could probably put 5-8k in the bank each year. Even if you're living
in NYC, it should be pretty easy to "survive" on 35k a year.

~~~
BrandonM
For me (the differences) --

Rent [1]: 300/mo = 3.6k

Transportation [2]: 100/mo = 1.2k

Food [3]: 250/mo = 3k

Total: 20.7k

Obviously that leaves a lot of things out, but that is what the other $14K+ is
for. If you can't live on 35K, I'm guessing it's because you're either
carrying too much debt, or you've convinced yourself you _need_ to spend $X/mo
on a car/living in <expensive city>/whatever when you really don't.

[1] Right now I actually am renting an entire house with one roommate and we
each pay $125/mo, but we are renting from a friend. Before I moved here, I
paid about $240 a month. I could easily find a place under $300/mo here in
Columbus, OH.

[2] I don't have a car right now; instead I use public transportation or ride
with my roommate or other friends. Even giving my friends gas money and
renting a car once a month or so would only come to 1-1.5K per year.

[3] I could easily get by on about $125/mo for groceries. Doubling that allows
me to go out a couple times a week as well.

------
rjurney
Lets start investing in our kids across the board.

State and federal funding for schools is inadequate. Wealthy areas invest
additional money in education to bring the quality up to acceptable. Poorer
areas cannot do so. Its an injustice that children from less affluent areas
cannot get a good education in a public school, cannot have the same
educational opportunities as students from more affluent areas.

Inequality in education is one of our most pressing problems, and yet nobody
talks about it because it doesn't effect the affluent.

~~~
jancona
If we don't invest enough why are per pupil expenditures highest in poor
quality urban districts? Perhaps the "investment" isn't being well-spent--
which I believe is Philip's real point in the OP.

~~~
rjurney
[http://nces.ed.gov/pubs2010/expenditures/tables/table_03.asp...](http://nces.ed.gov/pubs2010/expenditures/tables/table_03.asp?referrer=report)

$10,300. That is what we actually spend per pupil as a nation.

Look here: <http://nces.ed.gov/pubs2010/expenditures/tables/table_01.asp>

See the large variance in state and local spending? Much of that is
inequality.

To address your question: your assertion is factually incorrect. Some cities
spend more in inner city schools, and some spend less. The real inequalities
lie in rural schools.

