The Value of Education

In a recent comment, Jacob raised some substantive issues worth addressing in more depth. I’ll do so here and then return to a post I’m writing about re-emphasizing teaching at the post-secondary level. I think it’s worth reading Jacob’s comments first since they lay out the libertarian argument on education pretty clearly.

To begin with, I’ll concede that:

  1. Direct expenditures (measured by tax receipts and per-pupil spending) are not the only thing separating communities of high and low educational achievement. Family, peers, and cultural expectations play a huge role, as do indirect educational expenditures. And on a micro level, education is rarely a perfect correlate with economic success.
  2. Taxes for education do mean sacrificing some short-term economic benefit. The question (standard for investment decisions of all kinds) is one of appropriate balance – how much to put toward immediate use and how much to reinvest for future gains. As with all investment, there is a degree of uncertainty.
  3. College is not for everyone. Many young people are not ready to embark on a four year post-secondary program. Others are more temperamentally suited for careers that will not require a further degree.

But higher education does make a huge difference for a great many people. While it is true that in pursuing a college degree students largely sacrifice four years of earnings, the increases in future earning potential and relative economic security continue to be worthwhile for most students. The latest downturn has highlighted this second benefit, with college degree holders suffering substantially lower levels of long-term unemployment.

I think the basic issue here is how much we value equal opportunity for American citizens. As a young woman or young man graduates from high school, their educational achievement and ability to pay for future education are largely correlated to their parents’ educational and income attainments. If, as you suggest and I agree, post-secondary education is most effective for those with certain character traits that place them ahead of their peers, then we need to make that opportunity available to new adults of all backgrounds. Otherwise, we’re a nation not of equal opportunity but of hereditary privilege.

As a wealthy nation we can afford to keep the gates of education open to all of our citizens. The question is whether we value that kind of investment.

2 Responses to The Value of Education
  1. Jacob Morgan
    February 29, 2012 | 11:47 am

    I have trouble with the second to last paragraph.
    It is true, that an 18 year old’s ability to go to college is very closely tied to his parent’s willingness/ability to pay for it. (Obviously there are some exceptions, I will address that). You see this, and say, well we need to make sure that an 18 year old (assuming they are the type that would benefit from college) has the funding for college.

    My problem is, that 18 year old’s parents wealth is also directly related to where that kid is going to live, what he’s going to drive, what he’s going to eat, who he’s going to know, what job (frequently) he’s going to be given (full time or summer job). Big ETC. There is absolutely no way to remove hereditary privilege from the system.
    I would argue (and I’m not sure you would even disagree) that a parent’s connections often provide a much greater advantage to a child than an education does. (E.G. I currently work in a job that I initially got because my Dad knew the company’s owner. Sure I had the education, and was able to perform the job’s tasks. However, when I graduated, I GUARANTEE you that there were hundreds, if not thousands, of engineers graduating that were more qualified and capable than me.)

    So why pick just one piece of the hereditary lottery equation when it really isn’t even the biggest part of the problem?
    I would guess the idea is: “It’s at least partially helpful, and we have to do something to help even things out.” And the “we” in that sentence means the government.
    But is that really the case? There are currently thousands of privately funded scholarships that reward pretty much every possible thing from grades to athletic abilities to skin color to lack of privilege.

    Why not let the private sector take full control over the system? Private scholarships have a much easier time finding the people who truly ‘want’ it based purely on the flexibility of a smaller size.
    Private banks can give loans to those who truly ‘want’ it, knowing that they will get interest on the loans in the end.

    Why not take the government out of it. Sure, loans may have a slightly higher interest rate. This will mean people who attend colleges will be more likely to try. It also means that there will be fewer college graduates, bringing more value to the degrees that those graduates have. (Evening out the cost for those students who get the more expensive loans)

    • Jason
      March 2, 2012 | 12:44 pm


      You’re right that the second to last paragraph points up the central difference in our political temperament: our relative preference for government-bases approaches. In this case, I think education is a perfectly reasonable area for government to be involved. Not only because it is “at least partially helpful” but because we have a long history of state and local public education.

      It is interesting to me that you are willing to put so much faith in the market even as you identify the distortions inherent in the system. By your own admission, your employer did not choose the most qualified candidate he could get at the rate he was willing to pay. Other non-economic factors came into play. So why should we trust the market to distribute educational funding efficiently?

      You say that private banks and scholarships do a better job of ensuring that scholarship money goes to those who really want it. I’m not sure that’s true, but ‘want’ isn’t really the issue is it? The idea is to get the money to those who will maximize the return by putting their education to the best use. So far I know of no effective way of measuring that in advance.

      Your closing paragraph makes two claims that I’ll question. First, I doubt there is much relationship between effort in college and loan interest rates. If they are rational economic actors, students already have all the incentives they need to maximize their post-college income, regardless of the interest rate on their loans. And if they’re not rational economic actors, well, then the interest rates will again be incidental to their effort.

      Second, you assume that the value of a college education (or at least a significant part of it) is the matter of scarcity. Fewer college graduates means a higher premium for the degrees of those who possess them. That may be true in the short run labor market. But in the long run, the economic strength of the whole nation will depend on continuing to expand the educational attainment of the citizenry. That may not mean a traditional four year degree as it stands now. In fact, I’d be happy to see more alternative, focused certification programs. But the era in which a high school degree is sufficient for the vast majority of workers is quickly passing.