

Higher education: Is it really the next bubble? - georgecmu
http://www.economist.com/blogs/lexington/2011/04/higher_education

======
ryanjmo
"When I put the bubble hypothesis to Norton Grubb, professor of higher
education at the University of California, Berkeley, his response in an email
was that the bubble hypothesis was "ridiculous". He went on:

'The problem is that there are no other routes to better occupations and
higher salaries anymore, except for those who have odd skills (athletes, rock
stars, starlets willing to reveal all) - which most of us don't have.'"

Programing and start-up skills allow people to get better occupations and
higher salaries without education. This is only going to continue to be more
prevalent in the future; especially as these skills become more available to
the masses through resources like HN and incubators like YC.

I think education is in trouble...

~~~
Eddk
Don't flatter yourself... There is a lot that goes into building an advanced
economy beyond startups...Not to mention start-ups need educated workers to
become successful. This whole meme about education not being necessary is
utter nonsense. Only someone who has the narrowest understanding of how our
world works would subscribe to such a notion... do you want "half-assed"/"Sam
teach yourself aerodynamics in 21 days" engineers building your aircrafts? I
don't think so.

~~~
georgecmu
_do you want "half-assed"/"Sam teach yourself aerodynamics in 21 days"
engineers building your aircrafts?_

I don't want "Sam teach yourself C/C++ in 21 days" programmers to code for me
either.

------
TomOfTTB
What he fails to mention is that a lot of his salary statistics are self-
supporting. If you have a doctorate than your primary source of employment is
the education system. So it feeds back onto itself. You have people paying
outrageous fees to get doctorates and then going to work for universities
where they require the universities to charge even more outrageous fee to pay
them.

If people stop paying those fees then the salaries collapse.

~~~
georgecmu
_If you have a doctorate than your primary source of employment is the
education system._

Really? Isn't academia notorious for its low salaries? And yet, according to
statistics cited, PhD command the highest salaries on average. What could
possibly account for this puzzling discrepancy? Could it be that in many
fields in fact it's the industry that is the primary source of employment for
PhDs?

 _If people stop paying those fees then the salaries collapse._

So what self-supporting feedback system is responsible for high salaries of
workers with professional degrees?

EDIT: table of salaries at industrial research labs:
<http://www.cs.unc.edu/~azuma/IRsalary02.jpg>

~~~
TomOfTTB
Academia is NOT notorius for low salaries. Your average Professor makes
$108,000 per year plus generous benefits and a lifetime pension (think about
that one because it means they don't have to save for their retirement which
adds a lot to their bottom line)

Source: <http://www.bls.gov/oco/ocos066.htm>

As for your chart have you asked yourself who funds all those research labs?
Until you know that you can't really judge either way (where I live for
example most of the "private" labs are funded in part by UCLA)

~~~
georgecmu
Average _full_ professor, maybe? What percentage of PhDs make it to a full
professor? What's the average salary for an average post-doc?

Ultimately, research labs like Google, Microsoft Research, Boeing, Dow
Chemical, or Pfizer are funded by consumers and taxpayers. Not sure what labs
in your area are 'funded' by UCLA (most if not all of UCLA own labs, I'm sure,
get government or private funding) -- if you can give examples, I would
appreciate it.

Having seen my university's financial statements, I can tell you that net
tuition accounts for slightly less than 50% of our operating budget. The rest
comes from external funding sources -- public and private funds. My department
is fully funded from external sources and we're responsible for finding them.

~~~
rdouble
Salary information for state employees can be found in many databases. I was
surprised at how much professors at public universities make. For instance, at
the University of Minnesota, one prof in the education department made
$430,000. Almost every professor in the medical school made more than $400K.
Economics professors made $350,000/yr and even some lowly liberal arts
professors made more than $300K.

Part time instructors don't do that bad either. At the engineering school,
$60-$70K to teach two classes, use of all campus facilities (library, rec
center, etc), full health benefits, only work from August 15 until mid-May.
And you don't even need a PhD.

Sadly, the site I used makes it hard to directly link to a specific query, but
the tool I used is here: <http://extra.twincities.com/car/salaries/>

To me, this does not seem to me like poor academics suffering to do what they
love. In fact, factoring in pensions, relaxed working hours and benefits it
seems like much better overall compensation packages than almost any private
sector job. Especially in Minnesota. Outside of certain physician jobs, nobody
there really makes those sorts of salaries.

~~~
georgecmu
You mean you were surprised at how much professors at public universities
_may_ make.

Certainly, the stars will be offered a lot of money, and professors in the top
medical and business schools will be paid quite princely sums. But you might
just as well argue that a career in sports or acting guarantees a future of
wealth and fame.

I'd be very interested in find out more about your Minnesota engineering
school example. If you can't link in, maybe you can paste specifics here or on
pastebin?

~~~
rdouble
No, that is not what I meant. Many of my family members are academics so I am
familiar with the odds of getting a job in academia. However, I never actually
knew the real salaries. In fact, this search began because a chemist uncle of
mine was curious as to what he could have made if he went into academia
instead of industry. (Academia won, envy of college roommate ensued) I was
surprised at how much the professors actually do make.

I realize it's hard to get a full tenured professor job, but I thought that
once you got it, you maybe made $100K, tops. The University of Minnesota is
certainly not a top school and the professors are by no means superstars, so
their salaries were surprising. If a prof makes $300K at a 2nd tier
university, I wonder what they make at a good school like Stanford or Harvard?

The engineering school example is actually a job I am trying to get. After
finding out these salaries I thought "wow that seems like a nice vacation
after killing myself at startups the past 10 years," and started looking for a
position I could do myself. I know the salary through personal negotiation. On
the salary survey site it is probably one of the ones listed as "instructor."
I would prefer not to post the job ad as I don't need more competition. :P

~~~
georgecmu
_this search began because a chemist uncle of mine was curious as to what he
could have made if he went into academia instead of industry_

.. and were successful in academia, instead of industry.

 _The University of Minnesota is certainly not a top school and the professors
are by no means superstars, so their salaries were surprising._

UMN is actually up there in certain medical subfields (according to USNews,
it's in the 30s overall, and #5 in primary care). In any case, as I said, med
and business schools are in general a special case -- they have to compete
with high salaries to begin with, and they can afford it -- professional
students tend to pay their way.

However, the two tenured research professors at UPMC (which is up there as far
as med school rankings go) whose salaries I happen to know, make way less than
200K. And as far as I know, tenure no longer comes with a guarantee of salary
-- you have to get your own funding, i.e. get lots of grants.

In any case, I hope you get your 'vacation' and it turns out to be everything
you expect )

------
MaxGabriel
This was a pretty casual article, and the author does think the issue is
exploratory, but there wasn't much depth of analysis. The graphs show only
correlation between higher education and success, and if anything fit into the
thesis that Thiel et al supports: people have a 'belief' in higher education
(which explains the correlation--kids are told they HAVE to go to college, so
the smart kids make sure they jump through all the hoops and get their degree)
yet it doesn't truly educate the students in question.

~~~
Goladus
I agree that there wasn't much depth of analysis. But the problem with Theil's
thesis is that it doesn't really have much to do with what a bubble really is.
There can be overvalued things that people believe in without it being a
bubble. One of the big problems with a bubble is that it can "pop." There will
be a widespread, more-or-less simultaneous realization that the core
investment is worthless and the whole thing comes tumbling down at once,
sending shockwaves through the whole economy. Asset freezing causes other
businesses to fail, stock values plummet everywhere devouring life savings.
This causes lots of harm to people and is why bubbles are scary.

None of the people yammering on about a higher education bubble seem to be
discussing the issue in those terms. If automobiles are overvalued and people
stop buying them, there might be some pain as the market adjusts and the
existing industry dies but it's not a bubble pop.

It doesn't mean it's not something to analyze or worry about, the industrial
revolution never "popped" and we still have the rust belt, but it's likely
that throwing the word "bubble" around is just to get attention.

~~~
GiraffeNecktie
I would think a bubble requires something that can be bought and sold (gold
bars, equity, tulip bulbs, condos in Shanghai). You buy it with the
expectation that you can resell it for a higher price. Or, more to the point,
you accumulate and hoard beyond what is sane or reasonable in the expectation
of higher prices. For any given individual its difficult or impossible to say
what the real value of an education is going to be in the future. Even if
there are no prospects for someone with a degree in linguistics today, it
doesn't mean that the degree doesn't open a door tomorrow, perhaps in a
related field.

