Hold on to your college-degree butts, friends, because the logic is gooooing away.
(Somehow, I'm sure all of this is the boomers' fault #1579576, #1468968)
Today I'm out in the TDE ranting about (= well, reporting on) college degrees losing their economic labor market lustre.
Also, look at all those SN backlinks!! (It's hard work, but someone's gotta do it!)
Obvs, the stackers had a two-week preview of this... #1562329... told yahs, it's worth subscribing to Den!
For the longest time it was simply a matter of course that the bright, aspiring young ought to attend university; the fancier and more credentialed the institution, the better. [...] around American dinner tables, the question remained: “Where is your kid going to college?”
Not anymore
(or at least not obviously so!)
Some survey results have hinted at this for a while, even though the financial logic behind the college boom has long been straightforward. Give up four years of wages, pay tuition and living expenses (perhaps borrow to do so), and receive a credential that lets you earn considerably more for the rest of your working life. The degree was an investment in human capital — the noncynical story goes — and depending on your chosen profession (and how lavishly you spent on those credentials, e.g., high living expenses versus working on the side and graduating early), you could reasonably expect to earn back what you lost fairly quickly.
As I described in a piece for The Daily Economy last year, the calculations were never quite that simple: The relevant comparison isn’t the lifetime earnings of graduates and non-graduates, but the incremental earnings attributable to the degree, net of tuition, financing, and four years of foregone income. Regardless of how much of higher education’s investment returns reflected raw ability and how much was a signal, the underlying wage premium was still a real, observed phenomenon. And for decades it was large enough to make the college bet look fairly safe.
and:
At some level none of this is unsurprising (markets work!): rising returns to education were contingent on a specific postwar, turn-of-the-century set of economic circumstances. Of course. The race between education and technology told us as much decades ago; Claudia Goldin and Lawrence Katz’s series of scholarly articles dates from the 1990s! The book that developed the framework, The Race between Education and Technology, came out in 2008.
Writes Burn-Murdoch again: “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 college premium wasn’t a fact of nature or an economic law, just the result of particular technological change fleetingly favoring one set of skills.
from what I can tell only part of the value of college is textbook learning. a huge part of it is networking, getting pointed in the right direction, and opportunity to work on frontier topics in a low pressure setting
That's probably why I got such little return from it.
same, since those things are optional in college
yes, I believe this story -- but not everyone does and it's possible, however unlikely, that Den is wrong about something. I also vaguely remember that paper where they proxied ability etc via positive admission to Harvard but actually attended e.g., in-state college instead.
I don't remember that paper, specifically. There are an overwhelming number of different attempts at accounting for ability. That's why dissertation advisors warn students away from this topic: making a novel contribution is an enormous lift.
But is the degree to which higher education is screening for ability vs. building human capital a settled science? (Even if only for a specific time period / geography)?
It's not settled because there are still delusional people clinging to the notion of human capital development, despite the almost complete dearth of evidence.
My recollection from the enormous volume of papers we covered in grad school on this topic is that basically every different approach has ended up being more consistent with signaling or filtering than with human capital development. You end up needing to lean on some really odd and implausible assumptions to maintain the human capital story (like all learning happens right before graduation).
What I will say for the human capital hangers-on is that their treatment variables have much more measurement error (we only ever see imperfect proxies for amount of education received), so we would expect the estimates to be attenuated and harder to register.
I think buying a child a laptop and a bunch of ai model subscriptions is probably a better investment than the majority of college degrees, granted some degrees will still require some college but with ai the 8 years required to produce doctors will shrink drastically. But for the vast majority of people college will be waist of time and money.