
Governments have overestimated the economic returns of higher education - denzil_correa
https://www.economist.com/blogs/economist-explains/2018/03/economist-explains-0
======
kodis
I suspect that at least some of this is due to confusing cause with effect:
people see that most highly successful people have a collage degree, and
wrongly conclude that anyone with a collage degree will be highly successful.

A few of the other problems with this increased drive to send people to
collage is that now a collage degree is required -- as the article points out
-- as a signal of employability even for jobs where a high school education
would suffice; a drive away from trade school, even when a job in the trades
pays well and is quite secure; and of course the debt load that comes with
collage, even for a degree is in a field with little chance of providing a
good return on the cost of the degree.

~~~
gaius
More generally, it’s a problem with confusing a thing with the symbol of that
thing. You can’t make people richer by printing money and just handing it out,
tho’ that doesn’t stop governments trying it (quantitative easing being the
latest example). No mere coincidence that the same governments think they can
educate people by printing and handing out degree certificates.

~~~
TheOtherHobbes
The whole point of the SA article is that you _can_ make people richer by
printing money and handing it out.

It's absolutely clear about this. Printing money and handing it out is the
best possible strategy if you want a vibrant, inventive culture.

Conversely rationing access is self-defeating. You get a few individuals with
giga-wealth and a lot of friction everywhere else, which throws sand in the
wheels of future wealth creation.

~~~
skookumchuck
No, you can't. There's no free lunch. Printing money makes the person with the
new banknotes richer, but everyone else holding banknotes poorer. I.e. it's
zero-sum.

> if you want a vibrant, inventive culture

Nonsense.

------
kermittd
This was mentioned in another comment but nothing about "education" is about
actual education. It's primarily about credentialisim and not being locked out
of a career with a high ceiling.

Though I disagree with many of his political opinions Peter Thiel I think is
right on the mark when it comes to education. Additionally credentials serve
to lock people out of careers where they can thrive except for the rubber
stamp of a piece of paper.

In the words of Syndrome "if everyone is super, no one is". If every one has a
BS/BA , masters, PHD then in a real sense no one really does.

(Added after reading critical comments: "Nothing" is to strong of a word. With
that said I still think most of education is about signaling/credentialism
etc.)

~~~
com2kid
> This was mentioned in another comment but nothing about "education" is about
> actual education. It's primarily about credentialisim and not being locked
> out of a career with a high ceiling.

Really? Learning how the history of your country has no value? Learning how to
write properly, how to construct persuasive arguments is of no use? Learning
how to break an argument down into smaller parts and analyze it for soundness
has no practical application?

Because those are just a small list of the many skills I learned in college.

Not to mention higher level math, an understanding of biology, physics, and
chemistry, and a deeper appreciation for arts and music.

In a world flooded with propaganda and "sponsored messages", knowing how to
keep a clear head and peel away the layers of misdirection is an incredibly
important ability, one that a good education will teach.

In a world where scientific debate in matters of public policy is of utmost
importance, being able to understand the science being debated is a necessary
skill for the voting populace.

College is incredibly useful, I fail to understand why detractors insist that
it has no value. I will readily agree that corruption is rife and the cost is
increasing way to rapidly, while quality may very well be on the decline as
universities attempt to push more and more students through, but an educated
populace is by no means a bad thing.

~~~
maratd
> College is incredibly useful, I fail to understand why detractors insist
> that it has no value.

This black and white approach is silly. Of course it has value. The question
is whether the value that it provides is sufficient to offset the cost of the
tuition, housing, food, books, AND opportunity cost of not working. You're
easily looking at 150k at a _public_ institution for an intelligent kid _per
year_.

Are you saying you can't figure out how to acquire all those skills you
mentioned for less than 600k and 4 years spent? And are those skills necessary
for everyone?

~~~
RosanaAnaDana
Adding to this, much of what is useful about college is what you _do_ with
your time there. 80%+ of undergrads don't understand that they should be
_doing_ things with their time as an undergrad: working in a lab; running and
managing an active club; volunteering for the campus radio station.

Thinking of higher education as something that is administered to students, I
think, is a major reason it does so little for so many. Students have spent
their k-12 years having education 'done' to them. I would argue that you only
really get a successful experience at higher education if you treat it as
something you are 'doing' to/for/on yourself. In that sense its very similar
to any other kind of bootstrapped education, but very much so, the higher
education environment is much easier to do so in.

~~~
thomastjeffery
> Students have spent their k-12 years having education 'done' to them.

I think you have neatly expressed the root of the problem right there.

Education is best approached by the student, not compelled by the teacher.

------
TallGuyShort
While I agree the the economic impact of government-assisted education is
often overstated (or at least misunderstood) and that a degree and an
education is not a 1:1 mapping in either direction, education for education's
sake is a perfectly worthwhile goal, IMO. That often seems to get forgotten in
these discussions.

~~~
theseatoms
Yeah. Just recognize it as "consumption" rather than "investment" in economic
terms. People usually conflate the two with regard to home-ownership as well.

~~~
Symmetry
Even if education were entirely a matter of signalling (which obviously isn't
true) then it would still be a perfectly good personal investment in that it
would get you a better job than you would have otherwise. It would just be
social subsidies of it that would be consumption rather than investment.

------
nimbius
As a machinist mechanic by trade, higher education needs some serious reform.
The idea that youre going to spend four years of your life generating an
insurmountable debt only to arrive without a job is bleak. Some of these
degrees arent just useless, theyre outright goddamn predatory.

The saddest moment in my career was realizing my boss makes a fraction of what
I make after he pays his student loans. He still had to pay those loans when
the recession hit and he was out of a job for 3 years. That kind of pressure
with a wife and kids drives a man to crawl into a bottle.

------
mhneu
Higher education in the US has been seen as a way to improve one's lot in life
- to climb the class ladder. That's still true.

But there was a window in the 1970s-1990s in the US where it was MUCH easier
to use college and hard work to advance. Tuition was lower and it was easier
for poor and middle class kids to get in. Today, tuition has skyrocketed and
the middle class is completely filled with kids who hire college consultants
and train for standardized tests. Kids outside that elite sphere are at a big
disadvantage. That wasn't true in the 70s and 80s, but eventually the upper
and upper-middle class figured out how to take advantage of college
opportunities and crowded out the working and middle classes.

~~~
pm90
That's not strictly true. Colleges are getting more applications than every
before and are many of the best ones have tuition assistance programs for
those who can't afford tuition. However, its true that the awareness of these
kinds of opportunities is spotty among the poorer sections of American
society.

~~~
notfromhere
it doesn't matter if there's tuition assistance. Growing up poor you're at a
profound structural disadvantage to even get into those schools.

------
dalbasal
...For the same reason we are over/underestimating all sorts of things:
Correlations don't mean causation. Even when they do, subsidizing the cause
can break the causal link. Taking english classes and learning english might
be causally related, but paying people to take english classes may not have a
predictable result.

The current disadvantage=discrimination debate has the same problem. So do
many of the Scandi-inspired policy suggestions, assuming that policy X caused
result Y, and will again.... If we apply this logic in other places we'd
conclude that homosexuality increases salary. Evidence for these things is
probabilistic, and we suck at statistics, especially when we're being
political.

Anyway, I found this interesting (by ommission):

 _Part of the reason why university graduates earn more is because they are
brighter and harder-working to begin with_

Not that they were wealthier to begin with? Not for class reasons?

and...

 _humanities graduates, ...tend to earn more if they come from more
prestigious institutions suggests that one reason ... get ahead of peers in
the job market._

Get ahead how? Knowing people who are ahead? Being associated with people who
are ahead? Talking like people who are ahead? They already conceded that it
isn't the education....

Humanities (and educations generally), was the domain of the educated classes.
Lower class people sent their kids there for class mobility reasons. It was a
way for the more talented middle class kids to join the upper-middle classes,
_by joining them physically_. Kids from those classes, went to college to
strengthen the class association. In the UK, they were generally explicit
about this. The economist knows this. Why beat around the bush.

Higher class seeming people (yes, this still exists) do better in job markets.
..also in marriage markets, probably get loans easier...

------
DubiousPusher
I think I'm seeing some confusion on this thread about the term "specialist".
Basically, if you're anything other than a subsistence farmer, aren't you some
kind of specialist? Teachers, doctors, grocers, car salesman, lawyers,
bankers, mechanics, all these professions are limited in scope not just to one
economic area but to a small portion of that economic area. It's not college
that makes you a specialist. It's modern economies that demand you specialize.
Even if that specialty isn't considered "professional".

~~~
closeparen
You just listed a bunch of upper middle class occupations. Try food service,
retail, general construction, factory, or warehouse labor, driving, etc. These
are positions that, when they’re hiring at all, will hire any able-bodied
person known to be reliable and follow directions. In your city there is
probably somewhere day laborers hang out and contractors come by in their
pickups to hire anonymous strangers for a day’s work in cash under the table
with no collecting or reviewing of resumes. That’s what we mean by not
specialized.

The trades (electrical, plumbing, automotive, etc) are good examples of
specialized but not college-educated positions.

------
kylecordes
Education is in many ways a valuable preparation for future work, there are
many important goals which can only be achieved (or can be achieved better)
with lots of education.

But... it is also a social signal, and therefore a positional good. To the
extent there is social status in being among the top third of the education
scale, there can never be more than third of all people in that category.

The above seems ridiculously obvious... but is underappreciated in the
analysis of many phenomena.

(Another example: if you define poverty as the 15th percentile of some
measure, by definition the poverty level will always be 15%. To figure out if
there's real progress being made, on poverty or education or anything else, a
scale must be found that is not positional, that is somehow an absolute
measure.)

------
djschnei
1) the government wants more college grads (admirable)

2) the government makes it really easy to secure loans to go to college
(short-sighted)

3) the market is oversaturated with demand AND buying power (because of the
easy loans)

4) prices rise (duh)

5) now everyone is in crushing debt and a degree is far less valuable

Very simplified; but why is anyone surprised?

~~~
RickHull
Those surprised tend to measure success by intent rather than consequences.

~~~
djschnei
well said. Or if free college is their end, then these are the means. Complete
collapse.

------
kbutler
Because most people do? Because it's a sacred cow that you cannot criticize?
Because most of the elites have elite university credentials (almost by
definition)?

e.g., see Peter Thiel's criticisms [https://techcrunch.com/2011/04/10/peter-
thiel-were-in-a-bubb...](https://techcrunch.com/2011/04/10/peter-thiel-were-
in-a-bubble-and-its-not-the-internet-its-higher-education/)

~~~
forapurpose
> it's a sacred cow that you cannot criticize

That is hardly the case; it's trendier to criticize than to defend.

> Thiel

Thiel has many crazy ideas, some of which lack the sophistication of an
undergraduate paper. Money doesn't make you smart, but perhaps college would
have helped him. (EDIT: Apparently he did go to college and graduate school;
my point was mostly snark, but some education in many issues saves people from
thinking they are too clever.) It's no surprise that someone who openly wants
to disempower the public and eliminate democracy would be against the public
becoming educated and empowered.

~~~
kbutler
It's trendy to criticize the monetary cost of higher education, but it's
perceived as a near-necessity, with counter-examples being considered
noteworthy ("Bill Gates and Steve Jobs dropped out of college!")

~~~
gowld
Both of those people needed a college education, just not a diploma.

Steve Jobs credited Apple's phenomenal success to what he learned at liberal
arts college.

[http://www.reed.edu/steve-jobs](http://www.reed.edu/steve-jobs)

Bill Gates attended an elite high school and some elite college -- he was at
least as formally educated as the average college grad.

------
bhauer
In a surprising demonstration of not burying the lede, it's given away by the
subheading: " _Earning a degree is about signalling, and not just learning_."

~~~
danans
> "Earning a degree is about signalling, and not just learning"

This is nothing new.

It was this way since the beginning of higher education in religious
institutions. Higher education was a social signal that gave clerics power
over many aspects of society in their roles as religious leaders and advisers
to rulers.

In Europe it was common for non first-born sons of aristocrats to go into the
clergy via the academic route. They didn't do this to give up power, but to
associate themselves and their families with powerful religious/academic
cultural institutions.

Even during the post WW2 broadening of higher education access, it served as a
bridge to upper social classes.

You can't get rid of the class signalling aspect unless you can get rid of
class as a cultural phenomenon, which is unlikely.

Being broadly educated will always be a signal of class, no matter how it is
achieved, simply because it implies that you had the resources to study things
that are not of immediate vocational value.

But many aspects of higher education that don't have vocational value have a
lot of value in creating an informed, adaptable citizenry.

You can, however, reduce the degree to which higher class association via
higher education is needed in order to learn skills needed to achieve a decent
livelihood.

One way to achieve this is to reverse the trend of large cuts to public higher
education funding, which is the largest factor in the increased costs of those
institutions [1] (not fancy buildings).

[1] [https://fivethirtyeight.com/features/fancy-dorms-arent-
the-m...](https://fivethirtyeight.com/features/fancy-dorms-arent-the-main-
reason-tuition-is-skyrocketing/)

------
chris_va
Personally I think this article glosses over all of the important details and
is fairly useless.

This sort of casual assumption is infuriating:

"Part of the reason why university graduates earn more is because they are
brighter and harder-working to begin with."

Whether or not college is _only_ a sorting mechanism is unsupported by the
article. If we restate the intention of higher education as "make everyone
brighter and harder-working", then this whole article falls apart.

------
forapurpose
There's an assumption in the title (obviously) that appeals to a popular
argument on HN, but the article itself is not conclusive:

 _university graduates still make around 70% more than non-graduates suggests
that demand for skilled workers still far exceeds supply. / Yet governments
may actually be overestimating the economic benefits of higher education._

The article says the economic returns could be overestimated do to the social
benefits of college. I certainly agree about the social benefits, and I think
we need college open to all:

First, it's really about wealth and class; these economic arguments are a BS
distraction to a significant degree (though not entirely). I know of schools
in rich districts where 95% go to college, and in poor districts only miles
away where it's maybe 5%. What does that have to do with economic and social
benefits? Why should those social and economic benefits go to kids in rich
districts? The expansion of college means expanding it to the poor district; I
don't hear wealthy parents saying that their own kids shouldn't go, or that
their district should send fewer to college; the argument against college is
really an argument to not expand the same opportunities to the working class
and poor. For social/political reasons (racism, maintaining political power)
and self-interest (not paying taxes), there are even some who don't want the
poor kids to get the opportunity; it's an nascent aristocracy protecting
itself, which is incompatible with democracy (which is why people like Thiel
are against democracy and education) - though certainly that doesn't apply to
all critics and criticisms, we also shouldn't pretend it's not an issue.

Second, in the land(s) of opportunity, why are we suddenly rationing it
through central planning? Let people advance themselves and go to college if
they want to; give them the chance to advance themselves by making college
available to them, the best one they can get into. Who are you or I to tell
them they shouldn't go because we don't think it's economically worthwhile?

------
Clanan
> Estimates of the economic returns to higher education tend to assume that
> all students will graduate. In practice, around 30% of students in Europe
> and 40% of students in America will drop out before earning their degrees.

This leads to a dangerous debt situation. I saw this up close in New Mexico.
The state gave everyone a "bridge" scholarship which covered the first
semester of college. Students who had no business going to college would go
anyway and get a loan to cover the second semester. They would fail out and be
stuck with a nasty loan for no good reason.

------
juanmirocks
My story. I've even done a PhD myself. I'd barely recommend doing a degree
anymore to most people. The pace of change is huge and universities are barely
keeping up. The most needed is practical skills, which you can take on the go
and use online learning courses.

------
sremani
The relationship between Education and Prosperity is funny one. Argentina and
Egypt are good examples of societies that got educated but did not see
economic returns. (source: nntaleb).

A prosperous country gets more educated but an educated country may not always
prosper.

~~~
conanbatt
ARgentina's public education is disastrous at all levels.

While we have a public university that is free, mostly middle class goes
there. Upper class goes private, and lower class does not graduate highschool.
Our high-school graduation rate is 50%. And our public college graduation rate
is about 50% as well.

------
b0rsuk
Higher education - okay, but _quality_ education can't be overestimated.

I live in Poland and education actually seems to be getting worse over time,
while catholic church is consistently gaining ground. In primary + secondary
schools, there's more religion than physics, biology or chemistry. Mathematics
is the only science lesson still more common than religion. Technically there
should be "ethics" lessons as an alternative, but very few schools actually
employ such teachers, citing various excuses.

Recently, there's a push by education minister to let priests become educators
(form masters), taking orders from bishop rather than principal. Final exams
from catholic religion are not far away.

If you put tax money into religion rather than scientific grants, and you
complain your country has very low innovation rating, really, what do you
expect? Maybe you could export a new religion?

~~~
dgregd
During communism in Poland there was 1 hour of religion classes per week.
Classes were run in Catholic Church buildings. Now there are 2 hours of
religion classes in school buildings. Pupils who do not want to go to religion
classes can have a free time.

Do you really think that changing for example 1 hour of religion lesson per
week to 1 hour of chemistry would change a lot?

I doubt whether the ethics lesson in your case would result in less religion
intolerance. Someone who is that much ashamed of his own country should simply
emigrate, as President Komorowski advised.

PS. Polish Catholic Church also overestimated the impact of religion classes
for practicing Catholics. Now less people attend Sunday masses.

------
gesman
Little to do with economic returns.

Unrevokable student debt is one of the biggest government assets.

~~~
philipov
Only for a sufficiently restricted definition of asset. You're thinking of the
article that was referring to financial securities. Student debt may be
leading in that category, but the government doesn't own much in the way of
financial securities compared to land and military assets.

~~~
gesman
“ Over the last decade or so, there’s been an absolute explosion in student
loans, growing from $260 billion in 2004 to $1.31 trillion last year.

So, the total value of student loans in America today is LARGER than the total
value of subprime loans at the peak of the financial bubble.

And just like the subprime mortgages, many student loans are in default.

According to the Fed’s most recent Household Debt and Credit Report, the
student loan default rate is 11.2%, almost the same as the peak mortgage
default rate in 2010.

This is particularly interesting because student loans essentially have no
collateral.

Lenders make loans to students… but it’s not like the students have to pony up
their iPhones as security.

That’s what made the subprime debacle so dangerous.

Millions of homes were underwater, so when borrowers didn’t pay, lenders
didn’t have sufficient collateral to cover their loan exposure.

With student loans, there is no collateral. Lenders have no security to recoup
their loans.

So when students don’t pay, someone is going to take a hit.

That ‘someone’ will likely be you.

That’s because hundreds of billions of dollars of these student loans are
either owned or guaranteed by the United States government.

So as borrowers stop making payments, it’s the taxpayer who will suffer yet
another massive loss.

Let’s be honest, though, there’s something seriously screwed up with this
system.

Young people are pushed into this system by a society that places an
irrationally high value on university degrees.

Kids are told for their entire lives that if they study hard to get into a
good school, there will be a great career waiting for them.

For many young people this turned out to be a total lie.

In fact, Federal Reserve data once again show that, for at least 25% of
college graduates, salaries are no higher than for people with just a high
school diploma.

Racking up so much debt hardly seems worth it.

It seems bizarre to begin with that an 18-year old will know what s/he wants
to do in life, to the point that they should take on $50,000 in debt for a
piece of paper that might not even make them marketable.

What did any of us really know at age 18? And how many of us could have
accurately predicted our life’s path?

Very few.

And yet there’s an absurd amount of pressure to force young people into this
system that heaps debt upon them. “

— Simon Black

~~~
lambda_lover
Just so you know, I believe HN generally frowns upon user-imposed line breaks
when not strictly necessary because it hurts readability for mobile users. Not
a huge deal, but you might want to keep it in mind since you seem to put a lot
of thought into your comments.

I'm curious: unlike with the mortgage bubble, student loan debt is non-
dischargable-- even bankruptcy won't wipe it clean. And if you default on it,
they'll eventually start taking a percentage from your paychecks before
they're even deposited in your bank account. Doesn't this mean that the
government is eventually going to get its due from pretty much every student,
unless the student literally spends their entire life making no money/only
under-the-table income? Personally I'd be more concerned about the students
who will never escape their constantly-increasing debt than I am about the US
government, which will probably come out ahead no matter what here since a
good portion of students pay back their loans + high interest. Aren't we
guaranteeing loan profits for the US government on the backs of the future
retirement accounts and savings accounts of the middle class?

Then again, enough of the US already lives in poverty that I'm not convinced
that this is any worse than the situation we've had for the past 50 years.
Depressing, yes. But different, maybe not.

~~~
dragonwriter
> unlike with the mortgage bubble, student loan debt is non-dischargable--
> even bankruptcy won't wipe it clean.

Student loan debt is not non-dischargeable, though it's harder to discharge in
bankruptcy than general unsecured debt (and much harder to get out of than
mortgage debt, which can often be escaped without bankruptcy.)

------
danbruc
Well, economic returns have to originate from somewhere. Either your
additional education allows you to take something away from someone else our
it allows you to increase productivity and reap its benefits. Also if you
spend five additional years at university out of say fifty working years, then
you already have to increase productivity by ten percent only to match your
economic output without spending this additional five years studying. And in
highly competitive markets, that are already optimized to death, ten percent
is a lot and even then you just broke even.

------
rexgallorum2
Education is a sacred cow for cultural reasons and probably a gigantic waste
of resources on the whole.

I think it would help to step back (rather like an anthropologist) and ask
fundamental questions regarding the social, cultural, and economic functions
of education in a given society or economy (or globally) and go from there.

Regarding practical, real world questions on the value of a college education,
I can only say this: as much as I dislike German-style educational tracking,
the so-called 'dual system' in Germany does produce interesting results, and
provided the right conditions, something like it could be put into practice
elsewhere. At the very least it provides workers with the necessary technical
skills to do their jobs while shielding them somewhat from competition from
outsiders (this protectionist function should in theory help buoy up wages and
add job security, though collective agreements and general employment law
contribute to both) without without sending them to college. One can and
should of course debate the merits of general education and its putative
political, social, and cultural benefits, but if we are talking about the
bare-bones technical skills and practical experience needed to do a job, a
parallel apprenticeship and vocational training system as exists in Germany is
a viable alternative to university.

I could say a lot more, but I will leave it at that for now.

------
ZenoArrow
I wouldn't say the issue is that governments have overestimated the economic
returns of higher education, I would say the issue is that companies have
collectively underestimated the value of apprenticeships.

If the strongest possible economy is the one where the highest proportion of
citizens are making the most of their individual talents, apprenticeships seem
like a better fit than university for many professions, as they let the
apprentices learn a trade directly, which either results in them finding a job
they're good at or in finding out early that it isn't the path for them.
Studying at a university has other benefits outside the job market, and I
would still want anyone who wanted to go to have the opportunity to do so (by
making it more affordable), but if the only reason that some people (not all)
are going to university is to land a decently paid job, then let's just cut
out the middle man and let people learn whilst they work.

This has benefits for companies too, as they get a larger pool of potential
employees to work with, which ultimately keeps wages lower in the long run,
and I'd also suggest that apprentice schemes help build loyalty, which should
result in reduced disruption to business operations (compared to companies
that struggle to retain their staff).

------
analog31
In my view, it has become extremely popular to believe that higher education
is a waste of money and time -- famous people like Peter Thiel are promoting
the idea, and there are of course supporting "studies" like there are for all
popular ideas.

But there is a caveat that I see: If it is true that not all people benefit
from college, likewise, not all people benefit from not going to college. I'm
thinking of myself here. I would have been a terrible bricklayer. For one
thing, I'm not a physically strong person, though laying bricks might have
rectified that situation. I also don't know if I would have been able to live
with the nature of the job for 45 years, including its physical effects.

I might have been a terrible computer programmer. I learned programming in
high school, at a time when it didn't require a college degree. But would I
really have enjoyed being a programmer for 45 years? And so forth.

~~~
th3byrdm4n
The most important aspect of education is learning how to think. Whatever the
vocation.

------
alexashka
I don't see anything in the article to indicate that governments (multiple)
have overestimated anything.

Which governments? What were their estimates exactly?

This article just throws some factoids together to form paragraphs - not
making any coherent points in the process.

The article concludes with this: _Governments are right to fret about training
future workers_

Who is fretting? What does that even mean?

This sloppy journalism merely plays the good old tune of 'government isn't
doing the right thing' (a form of 'someone else is at fault'). It'd do more
good to look in the mirror and ask if you're doing a good job and start from
there. Don't worry about governments, start with yourself. In the case of
journalism, start with doing some research, coming up with a stance, having
arguments from multiple sides and then presenting them in a compelling manner.

------
triviatise
I graduated in 1992 and my state school (UIUC) cost around 4K year + 10K
housing, easily worth it. Today it is 30,000. Still probably a pretty good
deal. Over 25 years, the cost probably rose by about the same as inflation.

For schools that cost 100K+/year, parents would be better off taking the 400K
and investing in the S&P 500 over those 4 years. Because of compounding, their
child would never need to save a penny to have an outstanding retirement. If
the money doubles around every 8 years (9% ish) and they retire in about 48
years, they get 6 doubles, so their 400K is worth approximately 25 million (in
non inflation adjusted dollars)

~~~
TheCoelacanth
100K/year schools aren't for education. They are for class signalling. Someone
who graduates from the school is either a member of a certain class or part of
a select group that the school deemed worthy of associating with that class.

------
wolfspider
And I may have overestimated the returns of learning how to paint like Bob
Ross. No but seriously, reducing the value of labor to nothing is the cause
here. Who could have predicted that being so jaded about workers that dedicate
their lives to corporations would cause this to happen? So a typical citizen
that works out all the time, is perpetually happy, frugal with finances, and
only cares about work is a little too common nowadays (eerily so). This
actually makes labor itself have no value if people will do it for free. None
of these advantages work for people anymore because no one can stand out among
anyone else.

------
rotrux
I'm going to try and exemplify the "why" in a much shorter ammt of space using
some arbitrary numbers -

SCENARIO 1:

\- Year: 1965

\- # of jobs requiring college degree: 75

\- annual college graduates: 60

SCENARIO 2:

\- Year: 2018

\- # of jobs requiring college degree: 150

\- annual college graduates: 1,000

Aside from how horrifically wrong this^ is, the ratio problem remains.

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ericmcer
We are in a capitalist system that optimizes around financial gain. Our
educational system has traditionally not had the same goals. Its not hugely
surprising that it is not the best vehicle for creating perfect financial goal
achieving cogs. Apprenticeships, Bootcamps, online training, etc. are way
better for a vocation oriented education. You lose the well rounded, empathic,
and critical thinking gains that a traditional college education rewards, but
we don't seem to really care about those qualities anymore anyway.

~~~
snambi
Instead of calling it education, the term brain washing is more appropriate.
:))

------
HillaryBriss
Requisite link to Professor Bryan Caplan's case against high spending on
education in the current system:

"The key issue ... isn’t whether college pays, but why. The simple, popular
answer is that schools teach students useful job skills. But this dodges
puzzling questions."

More here:

[https://www.theatlantic.com/magazine/archive/2018/01/whats-c...](https://www.theatlantic.com/magazine/archive/2018/01/whats-
college-good-for/546590/)

------
lamename
> _But in around half of occupations with better-educated workers average
> wages have still fallen in real terms._

Did I miss something? "Half" is not a substantial argument without more
detail. What about the other half? Stagnant? Rising a little? Rising
dramatically? Which types of jobs fall into each bucket?

Not against the signalling argument per se, I'm just missing information.

------
tonyedgecombe
There was an interesting debate on this at LSE:
[https://www.youtube.com/watch?v=EmGL67coWwc](https://www.youtube.com/watch?v=EmGL67coWwc)

There is clearly a problem but I'm not sure what the answer is.

------
larrik
"Part of the reason why university graduates earn more is because they are
brighter and harder-working to begin with."

Is that it, though? Or do they just get to reap the rolling snowball of
opportunity from successful parents?

~~~
sp332
It doesn't say that's "it". It says that's "part".

------
bko
Would you rather have a degree from Harvard with no education, or a harvard
education with no degree?

If you prefer the degree to the education than you likely value the signaling
more than the human capital argument for education

~~~
77pt77
> If you prefer the degree to the education

This could be seen quite blatantly in the first years of MOOC courses.

People became really angry at the end because there was no real certification
being given.

It got really ugly.

~~~
robax
I'm trying to find a source to support your argument but I'm not having any
luck.

Coursera's original course offerings gave free certificates upon completion.
My understanding is that MOOCs started charging for certifications in an
effort to pay the bills. The jury is still out on whether these certifications
are taken seriously or not.

~~~
77pt77
They did give certificates, but a vocal minority was not happy that they were
not Stanford/MIT,... issued certificates.

It boils down to your last sentence:

> The jury is still out on whether these certifications are taken seriously or
> not.

Many people were taking those courses under the expectation that the
certification would be highly prestigious and felt defrauded when that wasn't
the case. The fact that they paid nothing only made matters worse because
people feel more entitled when they pay nothing for a service.

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socratewasright
One way to approach this could be to allow community colleges to give 3y or 4y
degrees for certain majors. It could significantly reduce tuition costs.

------
derivt
Higher education is not overestimated if it gives you better opportunities for
the future. Perhaps some kind of higher education provides little economic
value. I think that from a personal point of view, what you get from higher
education depends a lot of what you put into the table, if you are a hard
working intelligent guy and you have the ability to focus in what you are
really good at, investing in higher education will give you a good ROI.

------
antisthenes
And significantly underestimated the returns of accumulated and concentrated
capital.

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jdlyga
College should be more about career training.

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meuk
Paywalled...

~~~
tchen
[https://outline.com/kJVEkY](https://outline.com/kJVEkY)

~~~
meuk
Thank you sir. Also, where did you find it?

I'm getting downvoted, but I tried the first 20 results from the 'web link', I
can't read the article on any of them. Why not just post a readable link?

------
rfugger
TL;DR: Correlation does not imply causation.

~~~
dang
Please don't do this here.

------
scottlocklin
"since 1970 the share of workers with degrees has increased in virtually every
occupation. But in around half of occupations with better-educated workers
average wages have still fallen in real terms. " -I love it when "the
economist" forgets how "supply and demand" work.

Real talk: it's easier to govern a nation of debt serfs who have to take out
loans to take a glorified IQ test.

------
anovikov
Obvious reasons: locking young people in universities in their highest
testosterone years reduces crime and drug addiction. Especially among people
who don't get to have much returns from that education.

~~~
ztoben
Universities are a hotbed for binge drinking and drug use. So I'm not sure I
buy into that.

~~~
lambda_lover
I don't think college campuses have a reputation for violent crime, though. I
think the point is that maybe the students are ruining their own lives through
drug abuse, but they aren't robbing/killing/maiming others.

Considering how safe I'd feel on a college campus at 2am on a Friday night
compared to a rundown section of town, I'm tempted to believe that college
does keep kids away from the worst of violent crime. I can't find any studies
on the subject, unfortunately.

