Is college worth the cost?

The question, from the Honorable Mr. Phillips [Freakonomics blog]: "Is college worth the cost?"

The answer: I do not know, but I have some ideas about how to answer the question.

The first point is that we should begin by disaggregating whether all college diplomas are worth the same. Not to put too fine a point on it, but I think that we agree that degrees differ at the broadest level first by subject area (mathematics probably the most challenging, fashion design probably the least) and then by university quality (Harvard probably the best, Fort Snot Mid-State University and Cooking College probably the worst).

The second is that we should realize that college degrees are, at least to some degree (so to speak), positional goods even beyond rankings and subject. That is, the classic economist's signalling argument--that mere completion of a (say) University of Southern Indiana degree may signal something more valuable than dropping out of Cornell a year early--does hold. One of my favorite examples of this is a job posting (long since closed) from Penny Arcade, which included the following lines:

"And here are some other things we’re using to weed people out. It’s
not fair. I know. Life’s not fair.

- A Bachelor’s degree is preferred. I don’t care what it’s in.
- 2-3 years experience in a professional workplace as a designer
- You should probably be a fan of Penny Arcade. Probably. Yeah. "

PA, of course, was founded by two guys who never completed any post-secondary education. (Note: Actually, one of them may have, but I'm a thousand miles away from my reference books here.) And not that there's anything wrong with it! There are different standards for "talent" and "entrepreneurs" than for the people they employ, and that is how it should be. The point, however, is precisely that even Holkins and Krahulik (and Robert Khoo, in this case) are insisting on the credential as a credential and not for its "value." Cornell and USI are indeed equivalent here.

How would you disentangle these different strands? I'm not going to post the different empirical research here, both for reasons of time and also for reasons of not being at an IP address with clean access to JSTOR, but I think the readership knows that the arguments are actually a little bit more nuanced than the normal ones we hear thrown around. Suffice it to say that estimating the causal effect of attendance at Harvard versus Michigan is a little bit easier than estimating the causal effect of attending Wayne State versus not attending at all. Some clever empirical estimations have been done, but they are necessarily long-term (e.g., the ones exploiting the Vietnam draft lottery) and not necessarily relevant to today's marketplace.

That's important, because the fundamental driver for this question is now frankly financial. As it should be. In no other field of our normal experience, even including medicine, do we throw around so much money with so little idea of the benefit. When it comes to medicine, at least we have some confidence that more money may equal more life. For the Harvard/Michigan question, though, I'm not sure that we know how to answer that -- or whether the answer for someone at the 99th percentile is different for someone at the 99.99th percentile, or whether the economic benefits from attending Harvard have more to do with the social status of going to Natalie Portman's alma mater or more to do with the fine faculty. I mean, I think we all have private theories, but we don't really have any proof.

And that is the biggest problem here. The social scientific data is at least ambiguous about the effect of attending for most people, and certainly offers no direct advice about what people should major in. And yet the voices of authority that parents and their college-bound offspring listen to are uniform in their encouraging people go to college immediately and rarely draw a distinction between high- and low-quality schools (as opposed to high- and low-cost schools).

My caveats above aside, I am certain that a degree from the University of Oklahoma is better than one from Oklahoma State, and that one from Oklahoma State will travel better than one from Southwestern Kentucky Bible College. (I apologize if there is a SKBC.)

The data may be ambiguous, after all, but the costs are not. In the era of non-dischargeable student debt, that should be a real concern.

(There is a post that readers should read, and which I am including here so I don't lose it: Andrew Gelman offers some observations on the state of our knowledge about college degrees and how not to conduct a quantitative counterfactual.)

To be selfish for a moment: Most troubling, however, for a graduate student is this bullet point from Phillips's post:

Only a quarter (24%) of college presidents say that, if given a choice, they would prefer that most faculty at their institution be tenured. About seven-in-ten say they would prefer that faculty be employed on annual or long-term contracts.

Are we really moving toward a world in which public school teachers are going to have more job security and better pay than college faculty? I don't mean to be peevish, but this certainly triggers some destructive and non-productive feelings--like the feeling that if university faculty, for whom tenure was designed and for whom tenure has a real academic purpose, are going to be denied tenure while kindergarten teachers enjoy it, then maybe I'll just take a job at McKinsey after all.