It’s a truth universally acknowledged that intellectuals in the age of fiat decline and deteriorating institutions shall think university degrees obviously valuable. Surely little Tim should go to college? Surely you’re saving up for his tuition?
Nah, bruh. No more. #1561573
It’s a no-brainer that any teenager should aim for university because a degree carries substantial economic value. Degrees are also very useful for employers because they signal that a young person has advanced skills that are in high demand.
employers and officials have long argued that as the numbers attending university have ballooned, a degree has ceased to be a good proxy for job-relevant abilities outside of elite institutions and vocational subjects
The knowledge vs signalling conversation about university was interesting (or maybe it was the networks and friendships you form at Harvard that propelled your career forward?), but a complete misreading and misunderstanding of economic scarcity in an age of abundance https://stacker.news/items/1559495.
Value (#1550071 #1471628), the economics of AI and infinite generation (#1449095) etc, are things we won't shut up about over here in ~econ land.
“those statements have been taken as gospel for decades, but their legitimacy is increasingly in question.”
A closer read of economic history suggests they should always have been seen as more contingent than fixed
Of course. The race between education and technology told us as much — freakin’ decades ago: Goldin and Katz’ series of scholarly articles are from the ‘90s! The book, The Race between Education and Technology came out in 2008.
there is nothing inevitable about more education being met with more demand for those skills — it all depends on how the supply of particular skills interacts with the technological paradigm of the day.
The 1800s transition from artisans to larger and more complex businesses created demand for educated workers and delivered them a healthy wage premium, which the expansion of high school education in the early 20th century then eroded. The information revolution then exploded the scale and complexity of work, fuelling a long boom in knowledge-work jobs that buttressed the college wage premium over the past 40 years even as the numbers obtaining a degree expanded.
And then the field saturated; the wokeness devalued the experience (=consumption) of college as well as its financial value (=investment); and AI made most teaching (well, “teaching”) obsolete. Plus the cost, neither the opportunity one of working-saving-and-longer-time-for-stacking nor the direct financial one of debt (#980184, #1005700), was insignificant.
...with the shockingly surprising outcome that a) college attendance has stagnated, and b) the college wage premium is collapsing.
Still, admittedly positive, but these high numbers (80% vs 30%) are somewhat misleading since the extra earnings (potential...) have to outwork the debt and opportunity cost incurred to attend uni. The real return of college, seen as an investment, is drastically lower; quite possibly flirting with zero.
What makes this most noteworthy is that the college premium has declined just as the supply of college graduates began to level off in both countries. Typically, we would expect a supply slowdown to put upward pressure on prices (wage premiums) but here we see the opposite.
This is the only segment in Burn-Murdoch's excellent summary piece I disagree somewhat with.
Some small sliver of the intellectual cohort, yes, they went/go to university for prestige and because mum and dad and their friends expect it/pay for it, but for most people it was always a financial investment decision. Meaning the supply of college graduates dry up when they see the present writing on the wall: hang on, I don't ACTUALLY outearn my plumber mates, wait up, I don't ACTUALLY need this since Claude can just do it...?
“We may be a long way from settling into a new normal, but it’s increasingly clear the link between academic credentials and career prospects is weakening.”
Excellent article altogether. Great very succinct summary of the Race tech<->educ literature too
archive:
I mean, the causality can run both ways, soooo....
Moreover, there's a natural limit to the % of people you can grant degrees to and still have the degree actually mean anything
It’s also relevant which students are opting out of college.
My understanding is that it’s white male students leading that decline and male students are the ones who select their majors in what appear to be return maximizing ways.
Iiiiiinteresting, didn't think about this aspect
This. Plus it assumes the quality of graduates (as unit of supply) remained constant.
I think the college degree thing is changing fast, specially with AI making alot of skills more accessible.