Freakonomics Goes to College, Part 2: A New Freakonomics Radio Podcast

Our latest Freakonomics Radio podcast is called “Freakonomics Goes to College, Part 2.”

Part 1 explored the value of a college degree and the market for fake diplomas. This episode looks at tuition costs and also tries to figure out exactly how the college experience makes people so much better off.

You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.

While there are a lot of different voices in this episode, including current and recent college grads, the episode is also a bit heavy on economists (d’oh!), including:

+ David Card at Berkeley, whose education papers are here;

+ Ronald Ehrenberg at Cornell, whose recent paper “American Higher Education in Transition” discusses tuition inflation;

+ Betsey Stevenson; her blog contributions are here, and she tweets too;

+ Justin Wolfers, whose blog writing is here; he too tweets; additionally, he and Stevenson are a matched pair — heading for the University of Michigan, by the way — who also appeared in our “Economist’s Guide to Parenting” podcast, along with daughter Matilda, whom they discuss again in this episode; and:

+ Steve Levitt, who has this to say:

LEVITT: So I did a study many years back that looked at Chicago public schools, and it turned out that the single biggest impact of school choice in Chicago schools was giving kids who were not doing well in the traditional kinds of schools the opportunity to go to trade, culinary school, or schools that actually taught them real skill. So, clearly you can see how going to school to learn real skills like nursing or something like that could have huge returns. The tougher question is these general liberal-arts educations, what are you learning? And that’s something that economists haven’t even tried to really think about very much.

As we explain in the podcast, calculating the true costs of college isn’t simple. A sensible place to start is the College Board, whose website includes a Trends in College Pricing page, which compares tuition “sticker” prices versus net prices, and a Trends in Student Aid page, which catalogs various forms of financial aid. Here’s David Card on the potential returns to investment on a college education:

CARD: If you’re thinking about this as an investor, you know, you’ve got a kid and you’re thinking of sending them to college or not, you have to pay a lot of money upfront and then reap those returns later on. And several features of that are difficult. One is the cost that you have to pay upfront has gone up quite a bit, and the second is the uncertainty involved in whether the kid will actually successfully complete the degree. It’s a pretty risky investment.

And here’s Betsey Stevenson on an overlooked angle of college costs:

STEVENSON: I think that people often make the mistake of not thinking through the problem as systematically and thoroughly as an economist would advise. So first of all, there are two major costs of college. Everybody thinks about tuition. But there is another equally important cost, and that’s the opportunity cost of not working. So when you go to college you’re going to forgo working a job that’s going to pay you some kind of salary. And while lots of students have part-time jobs, or try to fit some kind of work in while they’re in college, they’re obviously not doing the kind of work that they would be doing if they didn’t go to college.

That said, the returns to education are, in a word, huge. College graduates earn more money, live longer, and are healthier and happier than similar people who don’t graduate from college. Is all this upside a product of the degree itself, or does college perform some kind of alchemy? To explore that angle, we hear from Amherst president Biddy Martin about the unlikely route she took to the land of higher education; and I travel back to Appalachian State to chat with my old documentary film professor Joe Murphy:

MURPHY: People are insisting on some measure to prove to them that their $100,000 investment or $40,000 investment is worth it. I can understand that. That’s a lot of money. But in reality, I don’t think there is a way to quantify the value of college. I know you can look at statistics about people who have a college education are better paid. I think you have to look at how quality of life issues. To me, ignorance breeds hatred. And if you can get people knowledgeable, there will be less hatred, more understanding. That’s my theory.

(I spoke to a couple more favorite former professors that day, Leon Lewis and Jim Winders, and you’ll be hearing a separate podcast later in the fall that includes all three of them.)

One last highlight of the episode: a conversation with recent-ish University of Chicago grad Bourree Lam, editor of this blog and all-around Freakonomics superstar, talking with another recent grad about the hardship of not finding suitable work after graduation.

So what have we learned about college? Let’s give the final word to Biddy Martin:

MARTIN: It’s impossible to learn a completely different way of thinking about things without unlearning what one has already learned. And I think it’s important to realize that, because it’s often the case now that people think about education as the acquisition of new things as if it were an unproblematic and promising process simply of adding to what one already knows or thinks. And the truth is it is transformative, and that means upending a whole set of assumptions about how to see things, what’s possible, what’s real.

Audio Transcript

College STUDENTS: My name is Allison, this is my last semester at Duke University... we’re at Minneapolis Technical and Community College … Mitchell State University in St. Paul… first year at Wellesley University … I’m at University of North Carolina …I’m a sophomore, I go to Morehouse College … I’m Jasmine, I’m a freshman and I’m at Harvard University. I’m Jasmine, and I’m a freshman, and I’m at Harvard University. You guys are both Jasmine? Yeah! (laughs)

FREAKONOMICS: Can I ask y'all some questions? This is for a show called Freakonomics Radio.

STUDENT: What? Of course. I’m an economics major and philosophy minor, bring it. Jeffrey Williams from East Atlanta, Georgia.

FREAKONOMICS: Do you think college is worth it?

STUDENT: I feel like if a bunch of people from the community just sat in a park every day for three months straight and just exchanged books and had lectures, we’d learn much more than we had in three years here.

STUDENT: I guess that when I came here, I was expecting I’d put a lot of time and effort and money into this, and I wanna get that out it’s not looking that way right away.

STUDENT: I always worry, because of what the economy’s like and everything, if I’m going to have a job, if there’s going to be a job out there for me.

STUDENT: In today’s day, a college degree is what a high school diploma was decades ago.

STUDENT: You didn’t really think about why you were going to college, just that you were going to.

STUDENT: Society forces you to think that because you go to college, you’re going to be successful. And that’s not true. You don’t need college.

[THEME]

ANNOUNCER: From WNYC and APM, American Public Media: This is Freakonomics Radio, the podcast that explores the hidden side of everything. Here’s your host, Stephen Dubner.

Stephen J. DUBNER: This is the second of two episodes about the value of a college education. In Part 1, we heard Allen Ezell, a former FBI agent, talk about the huge market for fake degrees. Pretty much any diploma that you can imagine, even an M.D., can be bought online.

Allen EZELL: You would be shocked at the number of people that buy this garbage and then put it on their resume, and then post this online.

DUBNER: But mostly we talked about real degrees. Steve Levitt, my Freakonomics friend and co-author, assured us that going to college definitely pays off in the long run.

LEVITT: One thing is clear is that the market puts a tremendous reward on education. So the best estimates that economists have are that each extra year of education that you get is worth about maybe an eight percent increment to your earnings each year for the rest of your life. So it turns out for most people buying a lot of education, or at least for the average person let me say, buying a lot of education is a really good deal.

DUBNER: But let’s acknowledge the obvious: buying all that education has gotten a lot more expensive.

David CARD: So if you’re thinking about this as an investor,

DUBNER: That’s David Card, he’s an economist at the University of California, Berkeley.

CARD: You know, you’ve got a kid and you’re thinking of sending them to college or not, you have to pay a lot of money upfront and then reap those returns later on. And several features of that are difficult. One is the cost that you have to pay upfront has gone up quite a bit, and the second is the uncertainty involved in whether the kid will actually successfully complete the degree. It’s a pretty risky investment.

DUBNER: Hey Bourree, say hello.

Bourree LAM: Hi.

DUBNER: So, Bourree Lam works here at Freakonomics Central -- she’s editor of the Freakonomics blog, among other things. And you are a fairly recent college graduate, yes?

LAM: Yes, I graduated in 2007 from the University of Chicago.

DUBNER: Good school. And you studied economics at Chicago, yes?

LAM: Yes, I did.

DUBNER: So economists always talk about the “returns to education,” that is, that a college degree hugely increases your chances of making a good living. So you must know these numbers by heart?

LAM: Of course. All of us know these numbers are, as college graduates, that they’re on our side and that statistically, college grads will make a lot more money over the lifetime than those who don’t go to college.

DUBNER: And you take great comfort knowing these numbers, I assume, yes?

LAM: More comfort when I was in college than now.

DUBNER: (laughs) So, what’s the problem? Why do they offer less comfort now?

LAM: Well, these are numbers on average. And after graduation,  a lot of my friends were struggling. Many of them were unemployed or underemployed, and they weren’t doing what they wanted to be doing. It was hard to look at those numbers.

DUBNER: Right, so the numbers in the aggregate paint this pretty great picture, but if you’re not living that life, then it’s not so pretty.

LAM: Right. I called up one of my friends to talk about this. His name is Luke Anable, and we graduated together from the University of Chicago.

DUBNER: Did Luke study economics as well?

LAM: No, he studied English.

DUBNER: OK, and what’s Luke doing for a job now?

LAM: Luke’s a bartender in Tuscon, Arizona.

DUBNER: So let’s hear what Luke had to say, yeah?

LAM: Has anybody asked you, what are you doing with your degree because of what you’re doing?

Luke ANABLE: I think so. I think my parents finally stopped asking that question, which is nice.

LAM: Yeah, I guess in the media and in general there’s this conversation about whether college is worth it. I know you don’t have second thoughts about that, you’re glad you went.

ANABLE: Yeah, definitely.

LAM: But that, what that next step is is kind of blurry for all of us.

ANABLE: I think so. And I think, for how sort of positive, and confident, and proud I am of the institution, I always felt like the career programming was kind of farcical. You know, it was like the college would hire the people who couldn’t get jobs to teach you about how to get a job so they could produce the numbers of graduates that had jobs.

LAM: Yeah.

ANABLE: It was just kind of silly. And then I think when you say is it worth it, you have to ask, worth what? Financially, was it worth a hundred and sixty thousand dollars? I mean, I don’t know, I probably haven’t made a hundred and sixty thousand dollars in the past four years.

LAM: That’s okay, I haven’t either. (laughs)

ANABLE: Yeah.

Betsey STEVENSON: I went to Wellesley College. I think it was a great place, and I saw the other day their tuition for the incoming class and almost spit out my drink.

DUBNER: That’s Betsey Stevenson.

Justin WOLFERS: I’m actually reading about the Fed right now.

DUBNER: And that’s Justin Wolfers.

WOLFERS: The committee’s members concurred that the date given in the statement would be subject to revision in response to significant changes...

STEVENSON: Justin’s obviously heard that sketch where the whole point of NPR is to bore people into submission.

DUBNER: Stevenson and Wolfers may sound a bit familiar. We’ve had them on our program before, and they write for the Freakonomics blog. They also happen to live together.

WOLFERS: We start with coauthors, then we move on to having offices next to each other, but yes we also share a home, a life, and a child.

DUBNER: They are both college professors, both economists, both of them in the neighborhood of 40 years old. And over the course of their careers, they have seen the cost of college climb and climb.

STEVENSON: I mean, it is true that the prices have just gone up a lot more than the prices of food, the prices of other sort of goods.

DUBNER: Maybe not gold, but I can’t think of any other things that have kept pace with tuition inflation.

WOLFERS: I think a key distinction people need to make is between sticker price, and actual prices being paid. And all of our alarm is about the rising sticker prices. And I have no doubt that the prices that people are actually paying, which is, you know, after scholarships and financial aid, and all these different ways we can help, I’ve no doubt that’s going up, but it’s not going up at anywhere near the rate that the sticker price is going up.

STEVENSON: And it’s not surprising that a bunch, particularly of the private schools, have increased the generosity of their aid program, so it’s not surprising that their top-end prices would go up to help make that balance.

WOLFERS: So let’s think about the school that I know best, which is Harvard, my alma mater. The cost of going to Harvard for a working-class kid has never been lower. It’s zero. So that’s a case where the sticker price is enormously high, the actual price being paid for a working-class kid is enormously much lower.

DUBNER: And what’s the incentive for the institution to make public a sticker price that’s so out of whack with the actual price for a certain kind of student?

WOLFERS: I actually think it’s wonderful that Harvard has raised its sticker price. Very few people pay the sticker price, only the kids of the super-rich, the people who get none of this financial aid and assistance, and so on. So the higher sticker price is essentially increasing price discrimination. We’re charging the rich more for college. The question we really need to ask ourselves, are we charging the working and the middle class more or less. That’s a much, much harder question. Knowing the sticker price tells you very little about that.

DUBNER: So, this is a great and important point that you’re making, but I just want to know where do we find that number?

WOLFERS: You call real education economists, not me.

[PHONE RINGING]

Ronald EHRENBERG: I’m Ronald Ehrenberg. I’m a professor at Cornell University where I also direct the Cornell Higher Education Research Institute.

DUBNER: Ronald Ehrenberg is a real education economist.

EHRENBERG: We should distinguish between the sticker price, the posted price that students that students are supposed to pay and the net tuition, which is the price that they pay once you take account of grant aid from the federal government, and state governments, institutional aid, and also tax credits that are provided by the federal government. And although the sticker price has gone up at very, very rapid rates, the rates of increase in the net tuition, which students actually pay, on average has been somewhat more modest.

DUBNER: Okay, but still -- in most cases net tuition prices have gone up too, a lot. We asked Ehrenberg: where’s all that money going?

EHRENBERG: The answer is really that there’s no such thing as a free lunch. Economists are very fond of saying that, that education currently is a highly labor-intensive industry and there has not been great productivity growth.

DUBNER: Allow me to translate from economist-speak. College is a “labor-intensive industry” because it involves real human beings -- professors, in this case -- doing a real task in real time, which means you can’t just flip a switch and churn out more students. Unless of course, you’re talking about online education, which is starting to change the college landscape, but let’s not get into that now.  So if you want more productivity, you have to hire more people, or pay the same people more money.

EHRENBERG: So this money all comes in, and the major thing that it pays for are faculty and staff salaries.

DUBNER: And don’t forget healthcare, which is a huge part of anybody’s salary. So it’s a complex situation and there are lots of nuances, like the difference between private and public schools.

EHRENBERG: In private higher education, when tuitions go up it’s usually because the private institutions are spending more on their students. But in public higher education when tuitions go up, expenditures per student often go down because in the public sector tuition increases are often efforts to try to make up for cutbacks in state support.

DUBNER: So that’s the supply side. What do we know about the demand side, the students? Here are some numbers: roughly two-thirds of students attending college today receive some kind of financial aid -- grants, loans, scholarships, education tax credits, and so on. And how much does that aid help? Well, about two-thirds of the students who graduate do so with debt, and their average debt is about $23,000. Now, that’s not a trivial amount, but, if the returns to education are as big as economists say they are, well, the math can still work. So for a family thinking about sending a kid to college, but struggling with the cost, it might help to think a bit like an economist -- to think about stretching your dollars. Here, once again, is David Card.

CARD: You don’t have to live in the dorm. You can live with your parents, which is what they do in all of Europe. You don’t have to go to the elite private school. You can go to the best public school you can get into. And the reality today is the majority of kids going to college are working part-time.

DUBNER: So for the most part, this seems like good news. The returns to education are huge. And college, despite some serious tuition inflation, doesn’t cost as much as it may seem, at least relative to its value. So does that mean that everyone should go to college?

STEVENSON: I think that people often make the mistake of not thinking through the problem as systematically and thoroughly as an economist would advise. So first of all, there are two major costs of college. Everybody thinks about tuition. But there is another equally important cost, and that’s the opportunity cost of not working. So when you go to college you’re going to forgo working a job that’s going to pay you some kind of salary. And while lots of students have part-time jobs, or try to fit some kind of work on while they’re in college, they’re obviously not doing the kind of work that they would be doing if they didn’t go to college.

DUBNER: Because, right, as you describe it, I mean, let’s just imagine this mythical eighteen-year-old kid who thinks about it and says, “Okay, I’m going to go spend four years, and probably a whole lot of someone’s money, to produce an outcome that is not quite clear to me” versus “I’m going to start tomorrow doing this thing that I am already pretty good at and I think I could be great at.” That strikes me as a harder dilemma, a tougher dilemma than I think most of us think about. So how do you go around thinking through that muddle?

WOLFERS: So Stephen, I’m going to surprise you, I was that guy. I finished high school in Australia and my great passion in life at the time was horse racing. I wanted to either become a professional gambler or a bookie when I grew up. And so when I finished school I was not going to go to college. I thought, exactly what am I going to learn in four years at college that I couldn’t learn being on the first rung of what I saw as a career path? I had a bookmaker who was going to mentor me, and I thought that this was going to be a career that I would really enjoy.

DUBNER: And we should say, and the legality of bookmaking privately in Australia versus here is what?

WOLFERS: So in Australia bookmaking is legal. So this would have been a legal career path.

DUBNER: Alright, very good.

WOLFERS: And I was one of those natural experiments. I was very lucky. I got fired two and half weeks, actually one and half weeks into my first job. And at that point I shrugged my shoulders and thought, what the heck, I’ll just go to college, now I’ve got something to do.

DUBNER: So when you see these numbers, when you see such low, relatively low unemployment the more education you have, when you see relatively more money earning, earning more money the more education you have, do you ever wonder how could there possibly be a debate about the value of college?

STEVENSON: Well, the debate is about is it worth it for the marginal kid, and if it is, what should they be doing, what should they be studying, why is it going to matter for them? And so if you’re trying to figure out for an individual kid what’s going to be the return for them, I think it’s a lot harder.

WOLFERS: Yeah, so if you had to grade some of the exams I’ve had to grade, the worst kid in my class is the marginal kid. And that kid, most of my students are outstanding, spectacular, they learn a lot, their exams are brilliant, but the students who are at the bottom, it’s not clear they understand a word I said. And so I think, you know, if the alternative is casual work, retail jobs, dead-end jobs, going nowhere jobs, then I would say, I’d look any eighteen-year-old kid in the eye and say, “Four more years of this isn’t taking you anywhere, four more years of college may well take you somewhere.” For kids who are going to start a trade, apprentices and the like, for whom four years in the workforce is going to be an investment in the future, there I think it’s a lot harder. I think if I had a kid who was good with their hands and not academically inclined, and they could find a good apprenticeship, sure, I’d encourage them to follow that.

DUBNER:So Wolfers and Stevenson aren’t arguing that college is right for every kid. But what about … their kid? Their daughter Matilda is three years old. And what happens if, 15 years from now, she has a different idea?

STEVENSON: Well, this is a great question because while I like her to think about there being choices in the world…

DUBNER: (laughs) She has no choice in this matter!

STEVENSON: I do not want her to grow up thinking about whether college is a choice. And in fact, when you said you were going to ask me that question it made me a little nervous. I was like, I don’t want her to listen to a radio interview where she hears this discussed as an option. I would be very disappointed if she chose not to go that path.

WOLFERS: Your question also comes a little late. Matilda actually reassured me the other day just before bath time: “Daddy, I’m going to college.”

DUBNER: Coming up, Steve Levitt tries to explain the magic that happens in a college classroom... or maybe it’s not in the classroom.

Steven LEVITT: It is kind of hard when you watch it to figure out where it is that the value is added.

[UNDERWRITING]

ANNOUNCER: From WNYC and APM: American Public Media, this is Freakonomics Radio. Here’s your host, Stephen Dubner.

DUBNER: Economists tell us that college is good for us, and not just in terms of higher pay. People who go to college tend to be healthier, happier, they tend to live longer. So we know that college works, somehow. But how? What exactly does college do to produce all those gains? Here’s Justin Wolfers again.

WOLFERS: It’s clear to me that college is a good choice for many. It’s much less clear to me why. I do the best I can when I teach. But it’s not clear that anything I teach the kids is going to make them better businesspeople, or better members of the economy, or more productive. It’s not obvious it wouldn’t. And then I think about my own experience, well, I went to college with a bunch of really smart people, so maybe it’s all peer effects, in which case we can just get the professors out. And maybe that’s a big part of it. Maybe it’s expectations. So maybe the important thing that I demonstrate for my students is not that demand curves slope down and supply curves slope up, but I expect them to go on and do great things. I’m not really sure what it is. I just know there are effects.

DUBNER: Steve Levitt has spent the past quarter-century on college campuses, either as a student or a professor. And, since he specializes in solving economic mysteries, I went to him with the question.

LEVITT: Personally I have to say I don’t know anything about that. And I watch the college production function, I watch us produce college students here at the University of Chicago, I was a college student being produced. It is kind of hard when you watch it to figure out where it is that the value is added. So, obviously I teach my students, I teach them very specific things. But I know that when I talk to them years later they don’t remember anything that I taught them. I mean, I can ask them the most simple questions about the material we covered and they have no recollections whatsoever, the typical student, so...

DUBNER: I’m curious, I mean, you teach at least one really big class each year right? The Economics of Crime is a pretty big class?

LEVITT: A hundred students, not huge.

DUBNER: And then occasionally smaller classes, yeah?

LEVITT: Yeah, mostly for the graduate students. I teach small classes, fifteen or twenty students.

DUBNER: Okay, so over your years of teaching, you’ve been teaching college for how long, more than like twelve, fifteen…

LEVITT: Fifteen.

DUBNER: Fifteen years. Okay, so you’ve seen a couple thousand people come through, and obviously you can’t know much about too many of them. But if you think about your role as a professor trying to teach people, you know, how to think, how to learn to think about things, problem solving and so on, what’s just your personal observation of when you’ve been successful at that or how often you think you may have been successful at helping that?

LEVITT: I think it’s, I think it… I would say about five of those students have later written me and said, “Hey, you really helped me learn how to think.” So that’s the only direct evidence I have. I give them exams. And my exams are really, a lot of my exams are about how to think. A counter-argument to what I’m saying about teaching kids how to think is that the returns that students get from other kinds of education, so real, actual skills like trade schools, I think there are real returns. So I did a study many years back that looked at Chicago public schools, and it turned out that the single biggest impact of school choice in the Chicago schools was giving kids who were not doing well in the traditional kinds of schools the opportunity to go to trade, culinary school, or schools that actually taught them real skills. So, clearly you can see how going to school to learn real skills like nursing or something like that could have huge returns. The tougher question is these general liberal arts education, what are you learning? And that’s something that economists haven’t even tried to really think about very much.

Biddy MARTIN: I’m Biddy Martin. I’m president of Amherst College.

DUBNER: Biddy Martin is not an economist. Before becoming an administrator, she was a professor of German and women’s studies. But as a college president, she has thought a lot about the power of education, and what happens to people during those four years. Martin herself grew up in rural Virginia. Her family expected her to go to high school, and do well,  but college was another issue.

MARTIN: The family was skeptical of education. They worried about the impact of a college education, especially on girls. They made it clear to me that it was more important for boys to be educated than for me. They grew up in a time and a place when the bias against what they would have called eggheads and overly educated people included, among other things, I think a fear that people with a lot of education think they’re better than those who don’t have an education. So they had a fear about being looked down on, I think. They had a fear of loss, that is, the loss of children who go off to college and begin to think differently, and as they used to say to me, talk differently. “We didn’t raise you to talk like that.” Who actually move geographically to other parts of the country. They became afraid in the late sixties and early seventies of the impact that college might have on political, my political views.

DUBNER: In high school, Martin had a guidance counselor who encouraged her to apply to college. And, over time, her family came around to the idea, even supported her. But their fear -- that she would change -- never really went away. And in retrospect... they were kind of right.

MARTIN: I left home and I didn’t return to live in that area. I made choices about my life, the kind of work I wanted to do, the people I wanted to be with, that were hard for them. And they never ceased being hard for them. It’s impossible to learn a completely different way of thinking about things without unlearning what one has already learned. And I think it’s important to realize that because it’s often the case now, people think about education as the acquisition of new things as if it were an unproblematic and promising process simply of adding to what one already knows or thinks. And the truth is, it is transformative, and that means upending a whole set of assumptions about how to see things, what’s possible, what’s real.

DUBNER: I recently visited my undergraduate alma mater, Appalachian State University. And I caught up with a few of my favorite professors, including Joe Murphy, who taught, and still teaches, documentary filmmaking. If you asked me whether I learned a lot from Joe Muphy, I’d say that absolutely I did. If you asked me what I learned... that’s harder to say. So I asked Joe to describe, from his perspective, what happens to a kid who goes to college.

Joe MURPHY: Well, I think the best thing people can learn in college is to not be afraid of the new or the different. You know, these people come to the college, or most people come to college, with a fairly walled-off background of experience. You know, they come from a high school in a small town, even a high school in a city, and they don’t know many people, they haven’t met many different kinds of racial ethnic groups. They haven’t been exposed to ideas that are radically different from their parents’ ideas. And so what I hope they take away from college, and I think the better ones do, is an openness to other people, other ideas, the great diversity that’s in life.

DUBNER: Yeah. I mean, I’ll tell you, that's what happened to me. Even a place like Appalachian State University in a place like Boone, North Carolina, which you would think would be pretty homogenous, some of the best friends I made here happened to be guys on the soccer team. There were the Nigerians, and Keith Lane from Ghana, and my good friend Greg Cuddy from Ireland who unfortunately has passed away. And I mean, it was a UN in the middle of the North Carolina -- it was bizarre! No expectation of that. So to me coming down, all these people were these wildly worldly, worldly people.

MURPHY: I guess the negative part for me is people who come to college to accumulate credit hours and all they’re really interested in doing is getting a degree. Because you can definitely get a degree here and know nothing, unfortunately, as I think you can anywhere. And it’s sad to see young people who set such a low standard for themselves, that's to me crushing. Somebody that’s 18, 19, 20 years old. Because chances are good they're going to live that way the rest of their lives, you know? I was a major in economics. The reason I majored in economics, because I thought it was interesting. Isn’t that a strange reason to major in something?

DUBNER: (laughs) You think that happens less these days?

MURPHY: Absolutely. I mean, people major in what they think will get them a job. People major in business because they think that will get them a job.

DUBNER: Do you blame them for that?

MURPHY: Um, no. I don’t. College is very expensive. And people are insisting on some measure to prove to them that their $100,000 investment or $40,000 investment is worth it. And I can understand that. I mean, that’s a lot of money. But in reality, I don’t think there is a way to quantify the value of college. And I know you can look at statistics about people who have a college education are better paid. I think you have to look at how quality of life issues, you know? To me, ignorance breeds hatred. And if you can get people knowledgeable, there will be less hatred, more understanding... that’s my theory.

STUDENT: It’s a question I’ve been asking myself a lot lately, if it’s worth it or not to go to college.

STUDENT: College is definitely worth it. Without an education, no one can go far. It doesn’t matter what you decide to do.

STUDENT: Just being even able to socialize and become a mature person, so when you hit the workforce you’re not as immature as you are when you came out of high school.

STUDENT: Higher education is the best thing. I think a human being is nothing without education.

STUDENT: I choose to go to college because I want to advance myself. I need a good family, I need a good job, I need a well-paid job. So if I am educated, gradually those things will come my way.

STUDENT: I’m not going to college to make more money, interestingly enough, I’m actually here because the stuff interests me.

STUDENT: When I really look back at what I’ve done, I’m about to graduate, and I really didn’t do a thing. I really just want to be happy, whatever that means. If that means 30 grand a year or 300 grand a year, I just want to be happy.

STUDENT: If I could redo the four, the past four years, I maybe wouldn’t go to college right away... if at all.

STUDENT: Is college worth it? Of course, man! Without knowledge, there’s no progress. We’re all students in the end, you know. No one’s bigger than nobody.

STUDENT: If you can find a way to do it big without going to school, then props to you, but we haven’t done that yet. We’re here, we’re here for the long haul, so it’s good.

[CREDITS]

Leave A Comment

Comments are moderated and generally will be posted if they are on-topic and not abusive.

 

COMMENTS: 64


  1. Julie says:

    One of the things I was surprised you didn’t cover in the podcast is the difference in earning potential between majors and degrees. Yes, pretty much any college degree will get you higher earnings than someone without a high school diploma, but the amount you’ll earn with a history major is going to be much lower than if you’d gone into engineering or medicine, and the chances of unemployment are higher. I’m not knocking the liberal college education — I have an M.A. in medieval history — but lumping a B.A. in philosophy with a B.Sc. in chemistry or a B.Comm. in accounting seems disingenuous to me.

    Well-loved. Like or Dislike: Thumb up 30 Thumb down 2
    • Frank Vasquez says:

      I agree that this is one of the more critical issues. The question of “college or not” is superficial, because people don’t live “in the aggregate”. They have to decide whether, given their personal options of schools, costs and degrees, what is the best option for them?

      Too many schools charge “top ten prices” without giving top ten value. Many employers simply will not bother looking at students with degrees from lesser-regarded schools, no matter how talented those kids may be and no matter how much they paid for their degree. And some degrees appear to have very little intrinsic worth, or at least much less than others. This problem is even more endemic with respect to law schools.

      But if the only conclusion is that college is valuable for its own sake without differentiation, shouldn’t we be encouraging students to simply take the least expensive option? I think that something about that conclusion does not sit too well with academia, even though it appears from this broadcast to be the unspoken truth.

      Well-loved. Like or Dislike: Thumb up 13 Thumb down 1
  2. Leah Kaminsky says:

    Very interesting exploration, as always! I wonder, though, if there’s not a hybrid option for students that crave the “learn how to think” liberal arts education and a little more direct, real-world practicality. Why not, for instance, spend three years studying liberal arts, and devote senior year to a start-up bootcamp like they do at the University of Texas at Austin, or to an intensive semester devoted to the types of skills you’ll need in the business world, from basic knowledge of accounting to managing social media? It would be great if we could find a way to maintain that beautiful principle of knowledge for knowledge’s sake while also learning the skills that can turn that knowledge into something directly valued in the marketplace.

    Well-loved. Like or Dislike: Thumb up 7 Thumb down 0
  3. Marin says:

    I subscribe to the theory that college has enormous intangible benefits. Most people go from their parents home, where some level of shelter and care is constantly provided to whatever their post-high school world is. College is like training wheels for the real world for a lot of us.

    My parents increased my responsibility for my life and finances over the course of my four years of college, and I rented my first apartment my junior year. Being wholly on my own wasn’t the ice-cube-down-the-back it could’ve been if I’d gone straight out of my parent’s care to a job and place of my own, since I’d juggled school and job, paid rent, bought and cooked food… all those lovely things that grown-ups should do for themselves.

    Thumb up 4 Thumb down 0
  4. Tom Barrett says:

    Great podcast. My daughter graduated from a private college two years ago as a highly touted fashion designer. The total cost to me, her mother, and her was $280,000 for the four years. One year of which she went to school in Milan, Italy, on an exchange program (three Italian college students exchanged for her!) so that was an added unplanned for cost that added to the total cost. Well that’s $70,000 a year in cold hard cash, ok her scholarship was worth $20,000 a year, leaving $25,000 a year each for her mother and me to pay (or rather for me to take out four parent/student loans that I will be paying for for the next 10 years, because students can’t get them). First, I make $70,000 a year gross. Second her mother, who is a college professor, told her she was going to the best school and not the school she teaches at (where the cost would have been zero for her!). My suggestion which was soundly rejected by her mother, was for her to get a basic undergraduate degree at a good state school where here mother teaches (and from which I graduated) and then go to a great, expensive graduate school. Third, she finally found a job in a clothing boutique making $12 an hour in NYC.

    College is important for a number of reasons, but is it worth it in the job market? Not really. College education adds to a base wage. So if a living wage in NYC is about $30 an hour, college has done nothing for her. Sure she is making a little more than minimum wage, but not much. You don’t have to go to fashion school to sell clothes.

    I graduated in 1976 with a BA in Biology and Chemistry and have never worked in that field. My schooling cost me $2,000 a year from 1972 – 76. I worked part-time and I walked away with $3,200 in student loans and a degree. Then I attended graduate school because I could not find a job that was paying more than $500 a month in my field and I was making twice that as a waiter. At the end of graduate school I was working for the state and my student loans came due, as my deferments stopped. Because I moved six or seven times they lost track of me and I them. A bill collector called one day to tell me that I needed to pay the $3,200. Two days later I was called out on an emergency that lasted for three weeks. My net overtime pay for the three weeks was $3,300. I paid off my four years of college with three weeks of overtime and had a $100 left over.

    Bottom line, college was a learning experience, but it was not a career move. I’ve never work in the fields I went to school in (undergraduate or graduate) and I’ve only had one potential employer ask to see my school transcripts and diploma. The degree has never “upped” my income and in a few cases I was told in job interviews that I was “over-educated” or “we don’t think you’d be happy here because of all your degrees.” Huh? I’m happy when I”m eating and paying bills.

    Anyway $280,000 was a ridiculous amount to pay for an undergraduate degree. Will there be a return for her? Well yeah, she didn’t pay a cent for it, her parents did. Will her education help me out down the road? I can only hope so when she gets famous.

    Well-loved. Like or Dislike: Thumb up 38 Thumb down 1
    • caleb b says:

      Wow, wow. Thanks for sharing. I feel for you buddy. I can not give this comment enough thumbs up.

      Well-loved. Like or Dislike: Thumb up 7 Thumb down 0
  5. Enter your name... says:

    If a primary benefit is in encountering people who are different from you, then do students who live at home throughout college get less benefit? Wouldn’t mandatory time in a dorm (with no choice about the race/religion/politics/etc of your neighbors) be important? Wouldn’t you get this same type of benefit from military service? And won’t the online-only students get none or very little of this benefit, since they don’t actually encounter any students or people who are different from them?

    Well-loved. Like or Dislike: Thumb up 11 Thumb down 0
    • James says:

      I disagree. For me, the primary social benefit of college (and I only attended after serving in the military and working for a decade or so) was in finally being able to interact with people who were LIKE me; who were (to use Biddy Martin’s term) fellow eggheads, regardless of their skin color or ethnic background.

      Thumb up 5 Thumb down 1
      • Enter your name... says:

        Finally feeling like you’re normal (an argument for high IQ students *not* going to the best large public school they can get into, as recommended for the average student here) has some psychological or emotional benefits, but I’m talking about the educational/intellectual benefits, which seem to be about encountering new and different ideas and concepts through peer effects.

        Thumb up 1 Thumb down 0
  6. Stephen says:

    Similarly to looking at data for particular majors, is there any data that gives insight into who might benefit most from going to college? Most of the conversation in the podcast centered on the “average” college student, with only a brief discussion of the differences in net price of college between different income classes. But these differences in net price begs the questions: for what family income level is going to college a prudent financial investment? Does this family income level change based on what subject the student plans to study? Is there a different class of individuals who are better suited to a trade degree versus a liberal arts degree?

    I am a huge proponent of the value of a liberal arts degree, but are these programs (core curricula, great books, social and political thought) financially sound investments for many families? Or is a liberal arts program a privilege only students from wealthy families or students on scholarships and aid can enjoy?

    Thumb up 3 Thumb down 0
  7. Sean says:

    Things are a little different here (I live in Canada) but I’d like to take a different spin at all of this: we (the grand WE, as in, our modern Western civilization) are better off when we increase the literacy and numeracy of the populace. Not just because it means some people get hired into higher paying occupations and pay more taxes and buy more things. But because the challenges our society faces going forward are better met by people that learned how to ask questions; to think critically; to not just take things at face value. To wit, by the kind of people that read “Freakonomics.”

    Education beyond high school increase the ability of a successful student to comprehend, read, write, communicate. Grasp difficult problems. Understand the “big picture.” Analyze things. So, more college graduates means more folks with the fundamental skill set and experience in handling information. You may not find yourself infinitely employable with infinite options when you come out, but even in the realms where you’re not in the field you studied, knowing more, about more, can’t hurt you.

    Well-loved. Like or Dislike: Thumb up 12 Thumb down 0
  8. Kuze says:

    You guys didn’t talk to Bryan Caplan?!?!

    Thumb up 3 Thumb down 1
  9. Brian says:

    I went to a “Top 30″ private school.

    My freshman year the total cost of school was about $35,000. Three years later the total cost had risen to about $55,000.

    There is absolutely no way anyone, anywhere, is going to justify my “education” costing an extra $20,000 a year just three years later. When I received my letter each time of tuition increasing the justification consisted of maybe one sentence. I believe it was something to the tune of “administrative costs.” The school could barely justify it themselves.

    The amount of students at the school did not change, the student-teacher ratio did not change. I would love for someone to try and justify my professors being $20,000 dollars a year better for me than my freshman year. Or over 50% better.

    (Of course when 2,000+ students are all paying an extra $20,000 a year the administrators, who are college grads, certainly boost the average earnings of college graduates.)

    We did get a new football stadium during this time. So you thought that could explain things until you remembered the entire stadium was built off alumni donations.

    We did get a renovated dorm house during this time. I don’t remember what paid for that, but I do remember not thinking a new dorm was increasing the my earning potential upon graduation. Especially considering the new dorm neglected to have doors on the hinges the first night I was there. (This is from a “Top 30″ private school!)

    Use the money and live off campus you say? Funny how the school passed a rule disallowing off campus housing during this time.

    (Oh, and because the housing market was so “great” during this time, my financial aid actually went down due to the fact my parents house increased in value. And it’s just hysterical that as soon as I graduated my parents house value completely tanked but the cost of my “education” did not.)

    Based on the jobs my classmates have, if they even have one, I highly doubt any study is going to come out of that school saying graduates of ’09 earnings are over 50% better than graduates of ’06 either.

    The worst aspect of all this is the public school down the road from me offered more things for free, at 2/3 less tuition cost. The private school even charged us for latex gloves for our mandatory bio labs. $55,000 a year, one of the largest endowments in the country, and the public school down the road can give out latex gloves for free but the private school needs to charge for them and our dissection kits?

    In fact, I think the private school I attended may be the best run business I’ve ever been around. Buy a new Calc book at $180, (because after all you HAVE to have that new edition), resell it for $50, watch the school then resell that book to next year’s freshman at $120.

    College is a business and market like anything else. (And they have mastered marketing.) As long as people continue to pay for it, prices will continue to climb.

    Lastly, I’m surprised no one has talked about this. I believe this book quotes a study showing that those who get into Harvard and don’t go are just as successful as those who get in and do go: http://www.amazon.com/The-Chosen-Admission-Exclusion-Princeton/dp/0618574581

    Well-loved. Like or Dislike: Thumb up 15 Thumb down 0
  10. Matt says:

    What a bunch of crap on your podcast. Your use of AVERAGES is very misleading. The real cause of the rise in tution is that they can. The demographics of college age students is that there is a huge supply of students and a small amount of space in colleges. You should also look at the wage inflation at colleges (how much does a 1m dollar president bring in). Colleges have become the new Military-Industrial complex.

    Thumb up 3 Thumb down 1
  11. Ian M says:

    I sure wish I had learned a trade like I wanted to. I had very good marks in school and I was led to believe that I would be wasting my academic achievements by not attending university. I relented and studied engineering. I hate what I do, sitting at a desk plugging away at excel or the like. I feel like I contribute nothing to the world through my work (I don’t mean that I don’t contribute through other aspects of my life).

    I would much rather be a millwright. At 38 with a mortgage and 2 children, going back to school is not an option. I am not unhappy in life but I am in my work.

    Perhaps a better question would be does earning a college degree generally make one happier?

    Thumb up 0 Thumb down 0
  12. A.J. Wilkes says:

    I think recent college grads are having pipe-dreams about entry level position’s salaries if they’re not checking the Occupational Employment Statistics for their city. At the very least, high school seniors need to be taught how to calculate the present values of future wages and costs of college using that data.

    Thumb up 1 Thumb down 0
  13. Julien Couvreur says:

    I am surprised that the podcast jumps from a correlation (people with degrees make 8% more over their lifetime) to a causation (degrees cause the wage increase) without offering evidence.

    Furthermore, I wish that this analysis would be broken into different majors. It seems likely that, the effect of a degree (if confirmed), would be different for an English major and a computer science major. Was that studied.

    Finally, you seem surprised that people would display time preference (prefer money now, rather than more money later). How does the 8% figure relate to the interest rate? How much money would you make if you chose to invest your tuition fee instead of spending it on college?

    Thumb up 4 Thumb down 0
  14. Joel D says:

    It was an enjoyable listen (both parts) but it left me feeling sort of dissatisfied as well. Ultimately the show’s only real takeaway was that many people have different perspectives about the value of college. I kind of suspected that already.

    I would have liked to hear some relevant, pointed questions posed. For example, to the guy who focused on college’s intangible benefits: Are those benefits worth $55k per year? Is college really the only or best place to acquire those benefits? To those who note (correctly) that the sticker price is different from the out-of-pocket cost: are there any studies quantifying the differences or looking for any relationship between rising sticker prices and the also-rising aid sources meant to offset them?

    I’m also intensely curious about another thing I had really hoped FR would explore: the “network effect,” or the idea that some of the correlation between a college degree and higher earnings has to do with the kinds of people you network with during college and the opportunity discoveries that follow from that. If the network effect is significant, the real difference between going to Harvard and going to Western Governors (all-online, therefore far less networking opportunities) seems much a good deal clearer.

    Joel (@joeld on Twitter)

    Thumb up 4 Thumb down 0
  15. Jeff says:

    I totally agree with Joe Murphy. I majored in History because I thought it was tremendously interesting. I’ve since graduated and got a job in advertising and I’m always asked how the transition even happened. I have ‘business’ students clamoring at my desk for internships and entry level openings who have no experience, knowledge, or understanding of advertising because they took the route that they thought would have returns in dollars rather than taking the route of what inspires them.

    Thumb up 2 Thumb down 1
  16. Michael Rochelle says:

    I was soooooooo looking forward to part 2 of this podcast, and it didn’t disappoint. Of course, there are many perspectives on this, and one I didn’t hear was the one that incoroporated the cost of student loans included in the sticker price. I heard the economist or professors mention sticker price and that many low-income or working-class students/families weren’t paying the sticker price of tuition at Harvard, but what about all of the students (like myself) who go to the thousands of other institutions besides Harvard and don’t get offered that sort of system. Looking at the “sticker price” or tax breaks or whatever other benefits of a college education is not complete unless you factor in the total amount that will be repaid over the course of that student’s life, or his or her parents’ lives. The sticker price may currently be $8,000 a year and that’s the number that is being used, but if you get your degree and think that you’ll just be handing over $8,000 back to the lender, that will be your fist wake up call.

    Secondly, in my opinion, students and professors are not the best source for whether a college education is worth it or not. Professors have a vested interest in the matter and students would sound really stupid to be going to school but then say there is little value in it. The people to ask would be the people who graduated 5, 10, 20, years ago. Where did they land in terms of the job market? How did the bad economy affect them? Are they in jobs that required the degree they worked on or any form of degree? I think there is a shift with this, but throughout my work history, most of my previous managers landed in their roles based on experience, not based on a degree, which many didn’t have. Though, I will admit that the supervisors or managers that I’ve had over the past three years have either had degrees or were working on them. However, five years ago, that wasn’t the case when the manager I had at that time didn’t have a degree, and the manager prior to that job didn’t have one either. Oh, and I work in the accounting field and both managers had the role of “accounting manager” or “accounts payable manager” without a degree. That should help give some context to my comment.

    Personally, I enjoyed the experience of college, but I have to be honest and say that the worth of my liberal arts undergrad degree is subjective. Basically, when I graduated in 2010, no one cared about my English degree. No interviews. No callbacks. Very limited job openings for writers. The only thing that was marketable about me was that I’d worked in accounting for 12 years while working on that degree. Fast forward two years and I’m currently a staff accountant working on my MBA, not because it’s my passion, but because I had to do something to arm myself with a degree that would put me in a better position to pay living expenses while paying back all the loans I took on while working on my English degree.

    So, ask me in 10 years was college worth it and I’ll be able to give a better answer. But on the flip side, because I’m creative and I like to write, if I hadn’t majored in English during undergrad, I would have never finished college because no other field interested me at the time. However, now, business is an interest out of necessity. I’ve grown to accept it as a meal ticket. And, yes, my accounting career is progressing, but more because of circumstance than because of my English degree.

    Thumb up 2 Thumb down 0
  17. Kyle Quinton says:

    I was quite interested in this topic and so made an effort to hunt down the podcast. I have to admit that I was quite disappointed. The program consistently referred to the benefits and costs of a college degree. But there is no such thing as “a college degree.” People get degrees in subjects: business, engineering, English, biology and each of these degrees bring different financial benefits, but the program insisted on perpetuating a fallacy by referring to “college degrees” in the aggregate. I was hoping for more perceptive analysis from you.

    Thumb up 2 Thumb down 0
  18. R Thomson says:

    Unfortunatelly, a very superfircial and unsatisfactory handling of an important topic. I’m all in favor of college education but your program made no useful contribution to answering why anyone should go to college given its high cost in the US nowadays and what people actually get for the money.

    - The statement that a university education vastly improves your earning potential: where does this data come from (you never attributed it), how is it calculated and who does it really apply to? As many of the comments posted here note, it really matters what subject a person majored in. Merely taking an average earnings figure for college graduates is superficial.

    - Even if we agree that you’re likely to earn more with a college degree than without, you did not look at the financial impact of carrying a large education debt for the first part of your working life. Someone paying off, say, a $50,000 college loan is probably going to be unable to start saving for retirement or anything else for the first ten years or so of their working life. Since saving is largely about compound interest, the loss of 10 years has a potentially large impact on a person’s over all wealth by the age of 50 or 60. Assuming that “earning power” is the only financial calculation anyone should make is simply superficial.

    - As several other comments have pointed out, you also ignored:
    a) the opportunity cost of the four years of lost earnings when a person is in college
    b) what the amount someone spends on college could have earned them had they invested it instead.

    - Why are college fees rising so much faster than anything else in the economy? You gave no satisfactory answer. Instead you asked a bunch of academics, whose jobs depend on these fees, to explain. Do you seriously think you’d get an impartial answer?

    - You asked the question why on earth colleges would publish massively high sticker prices if they are actually giving most people huge discounts and scholarships. Why create the bad publicity if they don;t have to? Then you dodged the answer. And you got those academics again to tell us about the big discrepancy between sticker prices and actual prices. (Somewhat like asking the fox to justify why chickens enjoy being killed and eaten). As many of the comments here demonstrate, the idea that almost no one pays full price, or close to it, for college is not true. And in any case, if the full price for four years of college should be, say, $250,000 but a student only pays $150,000, that is still a massive financial burden for someone to bear for the next decade or two.

    - I also wish you had considered the impact of massively high fees on the way people think about college and what they want out of it. Everyone you interviewed talked as if college was simply about studying to get a job at the end, as if it is just some expensive apprenticeship program. This is understandable since they have to justify and pay off the high cost of the tuition. The result is that you get an overproduction of economists, lawyers and other disciplines that supposedly lead to high paying jobs (which, by the way, is not necessarily good for society in general and may impose further costs on the economy). I was lucky enough to go to university a long time ago when the financial burdeen was very light. Back then, people were actually encouraged to study what they were passionate about (imagine that!) and not merely to calculate financial paybacks. That change in attitudes must surely have a big impact on people’s general, unquantifiable experience at college, and on what they get out of it. Doing what you love and what excites you vs just doing what you think you have to do for money – which one is likely to to be the more satisfying experience (and, by some measures, therefore better value-for-money)?

    Well-loved. Like or Dislike: Thumb up 10 Thumb down 0
    • James says:

      “…the opportunity cost of the four years of lost earnings when a person is in college…”

      The question that needs to be asked here is just how much is that person actually going to be earning for those four years. Without any sort of training, s/he’s probably going to be asking “Do you want fries with that?”, or doing some similar unskilled labor at minimum wage – if indeed there is any such work to be found. Not a whole lot of lost opportunity there.

      Thumb up 1 Thumb down 1
  19. Greg says:

    I really agree that any discussion of the “cost” of college is at best incomplete and at worst potentially deceptive without making two important distinctions. The first is looking at majors and the impact of graduate degree’s. As has been mentioned the benefits of certain majors vary greatly at the undergraduate level in the potential earning power and I suspect some scale differently with graduate school (a B.S. or B.A. in psychology versus a Ph.D).

    Also, I am very suspect of averages in this type of converstion. Technology and working paterns (not to mention the increasing cost of benfits as a % of compensation) have created highly variable compensation. Certain high performers (or just the lucky) may be driving up average returns but the everyday person may not be benefiting. I would be much more interested in the median benefit than a classic average return.

    As a parent with a child who is going to be a senior and does not have a good sense of what they would like to study this conversation if very intersting. I would really appreciate it if anyone could direct me to any information on this topic.

    Thanks,

    Thumb up 0 Thumb down 0
  20. Eli says:

    The problem with the worth of college is that the risk of the investment is totally on the student and their parents and not on the school nor the lender who is offering the loan. This means that an 17 or 18 year old kid must decide between going to work everyday or going to college and living in the dorms where they have fun things to do and kids their age to do it with. This teenager may not be equipped to think about the financial risk they are about to take if they accept the “aid” in student loans.

    Many schools are accepting kids who they probably shouldn’t because for them they are guaranteed the pay from that kid whether he finishes his education or not. The lenders of the student loans have no fear because they are well protected by the government. This means the only person left to deal with the financial risk and assess whether it is worth it is a teenager.

    Wouldn’t college be a little better regulated if the school and lender had to bear some of the financial risk ?

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 0
  21. Rachel says:

    I was disappointed with this podcast. It dismissed the increasing costs of college, which are real even at the ‘discounted’ level, and basically concluded ‘of course it’s worth it’. Maybe college is still worth it, but I felt the arguments were standard and unenlightening. No hidden sides here.

    Thumb up 2 Thumb down 0
    • Julien Couvreur says:

      Care to share evidence that average college costs have risen (actual paid, not label prices)?

      Thumb up 0 Thumb down 0
      • Joe J says:

        But they are paid, eventually. loans get paid back, and gov’t grants, mean higher taxes. So people are paying those sticker prices, just often indirectly.

        Thumb up 0 Thumb down 0
  22. Ben Hilby says:

    Great Podcast! But I believe you missed one important question that I believe is important in analyzing the value of college:

    Is the college grad more success because of college or because they have a higher capacity or another way to put it, that person has a higher ceiling for success?

    What is the difference between college students and non-college students?

    I believe an individual with an IQ over 120 will succeed at anything with hard work, college or no college. So, college might not be the reason for success, but the individual who’s ability is greater than those who don’t enter into college chooses college and still has success.

    Thumb up 1 Thumb down 0
  23. Ben Hilby says:

    Great Podcast! But I believe you missed one important question that I believe is important in analyzing the value of college:

    Is the college grad more success because of college or because they have a higher capacity or another way to put it, that person has a higher ceiling for success?

    What is the difference between college students and non-college students?

    I believe an individual with an IQ over 120 will succeed at anything with hard work, college or no college. So, college might not be the reason for success, but the individual who’s ability is greater chooses college, and that is margin in pay gap for college grads and non college grads.

    Thumb up 2 Thumb down 0
  24. Marcel says:

    Its a very timely topic. The increase in Tuition fees will have long term effect on the educated US demographic. Here is what I see at the moment.

    - Tuition fees are getting higher and the costs of living outside the home is increasing
    - Jobs offered after college are not as abundant as five years ago
    - In addition, higher paying jobs on Wall Street (Investment Banking, Accounting, Corporate Law) are falling at a much faster rate, and compensation has come down dramatically.
    - The costs of a new home has increased, even in the US, is very high. Although I don’t have the data, the higher paying jobs are in bigger cities, which I assume are less adversely impacted by the US Housing crash. (you can’t buy a house for 200k in NYC, Boston, Chicago, LA etc)

    So, in essence, an ambitious kid that wants to make it through study will face a large bill when done, plus is fighting expensive real estate, further impeding his or her ability to pay down debt with the cash flow that they earn. If the average age of the students coming out of University is between 23 and 35, (undergraduate and graduate), then when will this person start having a family? The fortunate candidates that are offered the top jobs will not want to lose them, and will further push marriage and family out to later years. Other students that do not have access to higher paying jobs will be face with the large debt burden. Will the average family have 0.3 children? Even if men can procreate until they die, women’s fertility has drops significantly over the age of 35…. (maybe invest in fertility drugs!!!)

    Its becoming a structural problem that does not seem to have a solution. Although the costs of tuition could stagnate until real wages catch up, I don’t really see them hitting double digit declines. Or we could see more students opt for online education.

    Overall: the value of a college degree is still very high and it has a lot of non-tangible benefits (contacts, problem solving, etc). But the bank cant use non-tangible benefits as collateral in future.

    Thumb up 0 Thumb down 0
  25. William Carpenter says:

    I found the podcast interesting, but I do have some debates with the “system” that we have, if you actually want to call it this. So lets run through a few things. I attended a private school for my education, not because I really wanted to but because I took a very non-traditional approach to education ie. I worked either full time or two part time jobs while I was attending. The income that I made from this in turn benefited me by lowering the amount of government assistance I could receive because apparently I just made too much. Why did I work so much you ask, well it was called necessity, I apparently liked having things such as food and clothes, my side note is my father passed when I was 15, so I paid my own way for a lot of things, and he really didn’t plan ahead for things such as this. I think my good lesson was don’t be too ambitious because it doesn’t help, I guess I should have just gotten someone pregnant and worked only as much as required and went to school for free on the government dime.

    The other reason I chose the private school was because I could take almost all of my classes in the evening, which I needed so I could continue to work, the state university that would have been cheaper didn’t accommodate very well. At one point I had two part time jobs working 50hr-60hr a week and 18hrs of school with no day off in 3months, that was really the worst however, yet I still maintained approximately a 3.75GPA.

    Next I would like someone to actually present the data used to state that the “real” cost of education when we are taking into account the amount of aid and tax credits provided to justify that the “net” price of education has decreased. I also don’t think that you can include that amounts for loans into this figure, it is not as though you are not paying this amount back.

    The other issue that I have had is the education that I received really can not be justified by the cost. I don’t feel that I received the dollar value that I paid out. I received an accounting degree and I am almost finished with my master’s so that I can sit for the CPA. I took a few years off between the two, but I don’t feel that I needed to be as “well rounded” as the curriculum necessitates. If I am going to be an accountant, why do I need be educated on world history, or the art’s? I don’t feel that it is applicable to the education that I am trying to prepare myself for. Teach me more on how to be a better and more efficient accountant, I know that it is a crazy concept.

    My vote for college education is self directed and negotiable prices. I can receive education on topics that will actually apply to what I am trying to educate myself in. In turn it will be like buying a car where I negotiate a price with the school instead of buying insurance where I get what I get for “X” price. I will be better prepared for the job market I am applying to, have greater knowledge in the subject, and actually have some say in what I am receiving. I bet I could have received a much more enjoyable and through education if the school would have let me actually challenge myself in various topics related to the field that I am in, and expanded my knowledge in other areas that are closely related, instead I was forced to settle on the “more well rounded” plan that we are all forced to have. I wonder if our nation could be more innovative if we were allowed to be educated in a manner such as this. Imagine if we allowed engineering students to take all of the required classes that relate to a field of engineering, and combine this with a solid business background. We could possibly have innovative individuals starting businesses all over the country. I personally would have taken additional economics classes and combined this with my accounting classes, I feel I would be a much better accountant if I was allowed to do this instead of just the basic required classes in economics.

    Thumb up 1 Thumb down 0
    • Caryn Morgan, MAED/AET, Bold Technologies says:

      Thank you for your eloquent response. I too was non-traditional and didn’t ever qualify for any “assistance” and now have mortgaged my old age to finish my Master’s degree.

      I agree, education needs to change and just because some other generation “always did it that way,” doesn’t make it right or sustainable. I have even considered finding a way to found a new non-traditional student college that pays the professors not just on their smarts but on their ability to engage their learners. Also, the cost of textbooks and school related items is significantly overpriced. I would drop that as well.

      I don’t 100% agree that we shouldn’t have some experiences that are outside of our “wheelhouse” in order to broaden our minds, but if a student is struggling in a course that is not their forte, really should the be penalized for at least trying to learn something new? I do like the idea of al la carte options. Many learners don’t know what they want to do when they “grow up.” Often this is because of the “well-rounded” plan for all learners. I look at Finland for some ideas and options and I find that they have some very interesting ideas. They focus their funding in the middle grades when learners are most likely to become disenchanted. There are virtually no “private” schools and they have a 100% literacy rate. We could learn a thing or two from countries that do education this well.

      Thumb up 0 Thumb down 0
  26. Sebastiaan says:

    The statement that everyone in Europe lives with their parents is incorrect. Many students move to different cities and live on their own (however not in dorms). E.g. in the Netherlands 62% of University and College students live on their own*. From what I’ve seen this is similar among other (northern) European countries, in the South, where money is less easy they often do live with their parents.

    *http://www.nibud.nl/fileadmin/user_upload/Documenten/PDF/onderzoeken/2012/Nibud_Studentenonderzoek_2012.pdf

    Thumb up 1 Thumb down 0
  27. Al Slagle says:

    The professors who separated “sticker price” and “actual paid tuition” are overlooking a key factor. They stated that they took out things like federal government grants, subsidies and scholarships from the “sticker price” to get the “actual paid tuition.” Well with the exception of scholarships, the federal government grants and subsidies come from taxes paid by the taxpayers. Who do they think are paying those taxes? The students and/or their parents! It’s impossible to calculate how much each person has paid in federal taxes which has been attributed to college funding, but it is inaccurate to ignore this factor in my view.

    Thumb up 2 Thumb down 0
    • Joe J says:

      A quick internet search, and on average 13% of the average state budget goes toward higher ed. (States are usually the main contributer.
      SO a quick calculation between incometax and property tax, no clue how to estimate my share of the state sales tax. Puts my % contribution to Higher ed to be $770/yr.

      Thumb up 0 Thumb down 0
  28. Will_Power says:

    I posted a lengthy reply on reddit:

    http://www.reddit.com/r/lostgeneration/comments/yj1qw/freakonomics_goes_to_college_part_1_a_new/c5whzxe

    I’ll copy and paste the text here, without the links:

    OK. I just listened to parts 1 and 2 (thanks to HearMeNom for the link to part 2). I’ll give a few quick thoughts, but first a little context. Just over two years ago, I posted The Net Present Value of College to /r/economics. It was an attempt to look at many of the issues discussed in the two Freakonomics Podcasts and attach a value to college for the average student. My findings were that, depending on the choice of discount rate, the value of college for the average student was between almost nothing (less than $10,000 over the working life of the student) to about $150,000 in present terms. Needless to say, I take issue with people who claim a 4-year degree is worth $1,000,000.

    So with that context in mind, here are a few thoughts about the podcasts, and the one major omission:

    - There was an inherent bias in most people interviewed for the podcast. Nearly all of them were professors or had other vested interests in seeing college attendance remain high.

    - With the previous point said, they touched on nearly all the major factors I had written about two years ago. Kudos to the producers for that.

    - Part 1 was somewhat handwavy about the benefits of college. Few numbers were presented. My own findings are that the ratio of salary for those with a 4-year degree to those with a high school diploma is shrinking, with the youngest cohort having a ratio of about 1.5 while the oldest cohort has a ratio of almost 2.

    - Toward the end of part 2, there was the typical “intangibles” discussion. I would simply point out that every thing they cited in that category can be found in other ways. I was in the Marine Corps, and my experience there paralleled everything they cited as less tangible benefit to college.

    - On at least one occasion during the two episodes there was the inclusion of loans as “financial aid.” This warrants a longer discussion, but I’ll just say that I don’t equate receiving a debt burden with a grant or a scholarship.

    Now for the big one. I won’t list this as a bullet point because it requires a little more explanation. Around 22:00 in part 2 they start to delve into what exactly makes the benefit of the college experience. To give the professors their due, they are honestly trying, but none of them could quite seem to figure it out. That’s probably because the obvious answer is taboo.

    Some decades ago, the doctrine of tabula rasa became popular. A child is a child is a child, the reasoning went. All kids come into this world as blank slates, and environment (whether home life or college) determines everything, including IQ.

    That idea has been well debunked, but the bad doctrinal hangover remain. Not one of the professors featured in the program even considered the idea that the brightest kids go to college in general, but those same kids would have done better than average had they not gone. There are multiple longitudinal studies that indicate this. The professors kept looking for some magic ingredient in their system that provides this benefit and never once considered that maybe it wasn’t there to begin with. Maybe it was in the kids when they got there And maybe, if this is the case, the value of college is overestimated.

    Well-loved. Like or Dislike: Thumb up 7 Thumb down 0
  29. Caleb B says:

    Someone also needs to point out that comparing incomes of college grads to non-college grads is incomplete. One must adjust college grad income by after-tax student loan payments (many students are now exceeding the loan interest deduction cap). Also, we need to compare AFTER-tax income to after-tax income for a true comparison.

    Thumb up 2 Thumb down 0
  30. Noe Garcia says:

    Your podcast is incredibly interesting,as it addresses some of the questions I have been asking myself for some time. I recently graduated from San Diego State University with a degree in Economics. I found that many of my classmates chose Economics as major, not really because they enjoyed the discipline, but because it is a major that they believe will land them a good job. Most of them constantly complained about how difficult and boring it was, but also said that even though they have other interests (art, painting, chemistry) they thought economics was a way to land a good job upon graduation. In other words, college is the means to an end, rather than being an end in itself.

    What I think most of my classmates concluded is that finishing college, on top of the knowledge one should obviously gain, works as a signal to employees. It let’s companies know that somebody went through the gruelling process of finishing a demanding and intellectually challenging college career. So, in that respect I agree with my classmates. However, I believe that the benefits of college extend beyond landing a good job- they also have to do with personal connections, personal growth, critical thinking and intellectual challenges, which are things that I think are invaluable.

    Thumb up 0 Thumb down 0
  31. Alexander Isaac, M.D. says:

    Mrs. Dubner and Levitt,

    I thought that these observations regarding your recent discussion of the true value of college education might be helpful.

    The trends driving the diminishing returns of a college education are buried in the history and culture of education in America, specifically, its commodification and branding. The offer of reliable access to the middle and upper middle class via education is losing its credibility. As the nation has grown in size and wealth over the past century, and international travel has become more accessible, the number of people desiring and having access to higher education has grown. Even if the jobs were there, (a very considerable if) the universities cannot produce enough meaningful bundles of “smart” or “competent” to ensure the promise of upward social mobility through higher education for so many people. I am not making a simple supply and demand argument, where supply has exceeded demand. Reliable mass production of a “product” as complex as education is reaching its margins.

    As a physician in my early forties I have an interesting vantage point. To demonstrate the supply side: thousands, (half of all of the yearly graduates by most counts) of International Medical Graduates come to the United States for the promise of being delivered the mother of all bundles of social success, an American medical degree. Many of my peers are U.S. born offspring of immigrants from the sub-continent and the middle east. They are walking in the worn out shoes of the grandchildren of Eastern European immigrants.

    Like undergraduate school the cost of medical school has increased dramatically, for many of the same reasons. However, in the case of medicine, the guild has constrained the supply and heroically struggles to control the quality, thus Nurse Practitioners. Social ambition and the demand for healthcare form an irresistible temptation to the Education Industry. But the quality of the training for Primary Care Practitioners cannot keep up with the intellectual complexity of the field or the human demands of the job, when it is done well. There aren’t enough competent faculty members or adequate training resources. But that doesn’t stop the administrators from filling the lecture halls.

    Thumb up 2 Thumb down 0
  32. Caryn Morgan, MAED/AET, Bold Technologies says:

    There was quite a discussion during this podcast of the “sticker price” verses actual costs. When I was attempting to qualify for scholarships as a student with an Associate’s degree, a good GPA, married, dyslexic and child of a veteran, I applied for 37 different scholarships. This was in 1993 and I was planning on attending the University of Central Florida. NOT ONE scholarship came back where I was qualified.

    I ended up completing my bachelor’s degree at the University of Phoenix 5 years later in Colorado. I paid “sticker price.” When I decided to go back for a second bachelors degree, this time from the Academy of Art University, I tried to find qualifying scholarships again; and still no joy. I qualified for NOTHING! The BFA 2 turned into an MFA program and I was quickly racking up Student Loan debt at “STICKER PRICE.”

    Not one college or university, I attended, suggested the cost could be lower, offered scholarship assistance, or even cared about anything other than gaining me as a student to pay “sticker price.” Sure the Financial aid department helped me get rolling on my student loan accounts but not once did they help me find scholarships I might not know exist.

    So, now I have my Master’s Degree in Adult Education and Training and I am the proud owner of nearly $70K in Student loans that mortgage my retirement. Once I pay these off I will be approaching retirement age (I will be retirement age and past), and all those dollars I spent on the education were not collected or invested into my retirement years. Therefore, I have blocked my ability to retire and even to have an old age where I don’t need to worry about how I will pay the bills, thanks to this education.

    I keep hearing that students rarely “pay sticker price.” That may be true of a traditional, out of high school students, but non-traditional, older, working, students… not so much. I paid sticker price even when I attended community college. When I started there in 1987 classes were 18.35/credit hour. These same classes, just 25 years later, are 210/credit hour. Even my nieces, one of whom started college this week, wouldn’t be able to take one class at a time, paying for it out of their own pockets, and expect to graduate in 5 years even 10 years. If this doesn’t change, the casam between the have’s and have not’s will so pronounced the class system will move back into a reality.

    Please don’t downplay the true cost verses the “sticker price,” unless there is a way that is fair and equitable to actually get they true $$$ for everyone.

    Thumb up 1 Thumb down 0
  33. Jon says:

    I really enjoyed learning others’ views on college. I didn’t go to college, I PLAYED college. By this I mean that I only took classes I could earn high grades and this helped my achieve my goal of getting into medical school. Although you may consider me narrow-minded, I got what I wanted out of college (& more).

    Anyway, I was actually very disappointed you didn’t include Coursera (coursera.org) or edX (edX.org) in your podcast. I think this category of online learning will play a major part of our future education system.

    Thumb up 1 Thumb down 0
  34. kc says:

    Great topic and good reporting however there is another side of this issue which could be covered in future episodes. And that could be “value of college across culture and countries”. I am from Nepal where a person can be super rich and not have any stature in the society because they do not have any formal education. In a collective society and culture as ours, people do not recognize the rich people as a go to person if they do not have college education. Your stature is determined by how many people come to you for advice, and people only come to you for advice if you have a college education. They speak politely and with respect to you.
    However this does not mean that doing what you like is not encouraged in various culture. Their messages is you can be a hermit for the rest of your life but only after you have a college degree.
    I am a Hindu as well, which you may know, has caste system. A person from lower cast does not have any weight on anything even if they have windfall and no education. In our culture, a college education not only resembles the earning potential but also a place in the society. People with lot of money without an college degree are labeled as “ Aaula Chhap” which literally means “thumb print”.

    Thumb up 0 Thumb down 0
  35. U Kema says:

    Hello all, long time listener, first time poster, and I wanted to post this, the only time I have seen at least from my limited experience, a job potentially offering benefits that might and that is a limited might are military jobs as a way to bypass college. I only say that because for someone who is 18, fairly smart, and doesn’t want to go to college, at least here in the states, it offers pay, access to things like security clearances, which seem to be a fairly rapid growth sector, and technical training in fields where the college experience may be overpriced or limited (things like the nuclear field, or satellite communications). Disclaimer, I’m active duty right now, nuclear field here, and I have noticed that for my non STEM (or business), major friends, my pay outpaced theirs in only 3 years, but this job isn’t for everyone. It assumes you are of perfect health, fairly young and able to handle a high paced lifestyle.

    Thumb up 0 Thumb down 0
  36. Jon says:

    Oh no students do NOT live with parents in “all of Europe”. It’s very unusual. Here in England the govt has suggested it and met tremendous opposition.

    Thumb up 0 Thumb down 0
  37. jon says:

    Huh! You have a problem with interruptions eh? I post a comment and the podcast starts again from the beginning. Here goes again

    Thumb up 0 Thumb down 0
  38. Jean says:

    I have an issue with Wolfer’s comments “the cost of going to Harvard for a working class kid has never been lower…it’s zero” and “very few people pay the sticker price – only the kids of the super-rich. The people who get none of this financial aid and assistance and so on”. Our daughter will start school at our state university this fall. My husband is a residential carpenter and I work in a community bank. I have an undergraduate degree and he is a high school graduate. We are the face of the working class. And yet, other than the $856 U Promise scholarship given to all state residents, we are paying the tuition “sticker price” of $13,568. Freshmen are required to live on campus so add room and board and the price of books – even used or rentals – and the cost of attendance is $24,662. That’s more than 1/3 of what we our gross income will be this year. Now add the cost of attending for our son who will be a junior this year, also at a state school, and I argue that college is cheaper now for the working class than it’s ever been.

    Thumb up 1 Thumb down 0
  39. Mike says:

    Interesting podcast, but not really applicable from a utility perspective for myself and wife who both already hold master’s degrees (Maybe it is though, maybe going for our PhD would be worth it for those addition 8% in income per year.). What is applicable and I find myself wondering is whether public education vs. private vs. homeschooling, etc. is worth it. Or more specifically, is there data to indicate one is better or has better outcomes. As a parent with pre-school age children, this information would be beneficial.

    Thumb up 0 Thumb down 0
  40. Chris says:

    I consider college to be similar to the Marshmallow test. I suspect 50% of the value of a college education is sticking it out and delaying gratification of a full-time paycheck. Many non-college educated folks are competing with the college educated. The Labor Statistics show that unemployment doubles as you go from college degree to some college to high school only. The stats are stark.

    Thumb up 1 Thumb down 0
  41. Ryan says:

    Most importantly, thank you for the publications. They are more comprehensive than any college lecture I took.

    I appreciated the in depth questioning of what obtains from a college experience. If it ended up not being the course work, but rather the ‘experience’, why stop there? Why not ascertain what one gets from an online college?

    I would also be interested in both of your opinions on the suspected education bubble that is to come. With courses being published for free, and unhappy customers(as you can see below me), it is clearly inevitable.

    Thanks again for the great podcasts!

    For what it is worth I am now unemployed. I was making $13/hr with two degrees. Looking back, I would have gotten neither.

    Sorry if you did cover either of these subjects. I tend to listen in the car and can be distracted from time to time!

    Thumb up 0 Thumb down 0
  42. Babbo says:

    I found myself feeling disappointed by this segment of the podcast, particularly the closing remarks, in a way that’s very unusual for the Freakonomics podcast. It’s great to hear from a respected educator who helped mold Dubner into the icon he is today, but I was frankly put off by his conclusions about the value of a college education boiling down to “diversity” and particularly his attribution of the phrase “ignorance breeds hatred” to non-college educated people as a class, a statement which to me suggests a certain kind of hatred in itself. With utmost respect to the host and guest(s), these comments and others in this episode in particular come off as shallowly politically ideological in nature, and a big departure from what I’ve come to expect from the politically unbeholden data-focused minds of the Freakonomics team over the course of two books and 80+ podcasts. Human interest angles on socioeconomic issues are important, but they’re also everywhere. The hidden side, on the other hand, is something the world has come to depend on Freakonomics to deliver, and when you guys back off your usual academic rigor and let someone else do too much of the talking for you, one gets a sense that important details are going unexamined and it really feels like the conversation as a whole is diminished.

    Thumb up 3 Thumb down 1
  43. Andreas Moser says:

    The most important quote was the one by a student (at around 1:00 of the podcast) who assumed he would have learned much more if he had sat in a park with other people and exchanged books and had lectures: http://andreasmoser.wordpress.com/2012/09/07/is-university-worth-it/

    To me as an European, it was shocking to see how readily parents spend up to 100,000 $ for a college that doesn’t even lead to their children becoming fluent in another language, when the children could study in South America or Europe for a fraction of these costs, have equally good education (at least in many countries of Europe) and pick up an additional language on the way. Not to mention the experience of living in a different culture.

    Thumb up 0 Thumb down 0
  44. Matthew says:

    Steven

    I am an internal recruiter at a very large company in St. Louis, MO. This subject regarding human equity and paths to attain market value within the workforce is a subject I know much about.

    There was a question posed near the end of the broadcast. What do we really learn in college?

    My first boss once told me that he would only employee people who have attained a diploma. He told me “the reason I will only employee educated people is because they have proven that they have learned how to learn.”

    This may be an oversimplification, but I do believe this holds true.

    Employment is a risk analysis. What is the chance this candidate will be able to make a positive impact on this company with the least cost possible, and the lowest risk possible.

    When young students are coming out of college they have demonstrated the ability to show up to learn/produce, find the answer to questions that they do not know, and communicate both written and verbal.

    The marketability of a degree, excluding higher education such as, MD, PHD, EXT, is that the candidate has demonstrated success. In business, the candidate has proven that he has learned business language, concepts, and how to learn.

    Another question posed was why education and economic success are correlated. The educators even express their bewilderment of this question.

    Educators tend to believe student success is based on the student’s level of effort or comprehension to their 140 hours of class. Class education is a factor; however the true marketable education for the average graduate is what they learned outside the class room. The real marketable portion of a student’s education is in their Networking, Self-reliance, self-control, humility, and willingness to compete.

    Thank you for the time

    Thumb up 1 Thumb down 0
  45. deserthackberry says:

    I had to laugh when one of the interviewees tried to justify the cost of college by talking about academic salaries. I worked at a state university as a grant-funded research technician in the 80s and 90s, and my sister now teaches at one. Both of us saw pretty much the same thing: Highly paid, “dead wood”, tenured professors who don’t teach or do research — or do much of anything else — while low-paid temporary technicians, post-docs, and visiting scholars do the research and low-paid temporary lecturers and teaching assistants do the teaching. At TAXPAYER-FUNDED state colleges. And don’t even get me started on the exorbitant administrative salaries and perks, including outrageous “retirement” salaries.

    Thumb up 1 Thumb down 0
  46. Chris says:

    No comments on signalling? That’s essentially all that degrees are used for within HR departments at large companies, at least in my experience doing consulting work for dozens…

    Thumb up 1 Thumb down 0
  47. NYC55 says:

    You’re paying to network and be trained in the language and socialization of the milieu in which you want to participate, for undergrad liberal arts degrees. Any field involving serious math is different. I wish I’d had the sense to learn real skills in college.

    Thumb up 0 Thumb down 0
  48. Scott says:

    The snippet that really caught my attention was about the “labor intensive” nature of college instruction, particularly juxtaposed with a recent press release from Coursera (IIRC – one of the MOOC Co’s anyway) about needing local facilitators at their “Learning Hubs” to improve the dismal course completion (nevermind mastery) rates.

    How good are technology enabled assembly line widget edu-quanta if 95% plus fall off the super-cheap, highly scaled assembly line? This is a really important fundamental question facing higher education, particularly with the faddish view of web-based “tech” as the uber-disruptor (of business models).

    The rest of Ehrenberg’s paper – though far be it for me to suggest a a research academic writing on the economics of higher education is without incentive – is well worth reading and says plenty of freakonomically counter-intuitive things about tenure and research faculty as well.

    Please follow up on this too – the CW too often buys into a college-as-trade-school view these days and thinks of tenured senior faculty as dead wood. I work in Academia but am not tenure-track faculty.

    Thumb up 0 Thumb down 0
  49. Jin says:

    I’m glad i went to college, it allowed me the opportunity to expand my mind and learn concepts and critical thinking. i did a BA in Philosophy and Socio-Legal Studies (initially with plans to move into a graduate Juris Doctorate) but found i didn’t know what i wanted to do with myself. ended up enrolling into a culinary school, work full time now as a chef, I make around 50K a year, which is nothing to write home about but i live comfortably, i’m told i earn as much as highschool teachers. the biggest thing i miss about university is the vast amounts of smart beautiful women i would meet on a day to day basis actually just the amount of interesting people i’d meet everyday.

    I’d argue tertiary education should not cost what it does and should be available for everyone, I’m fortunate to have my student loans paid off and being in my mid-20s without that debt looming over me.

    Thumb up 0 Thumb down 0
  50. Met says:

    You guys should do similar story on Australia. Here university education has no value, school dropouts, uneducated people and junkies do high paid professional jobs. Only qualification required is you have be of certain ethnic background. I have university qualification and struggled a lot here. There are lot of people who migrated to Australia and have local university degrees but they work as Taxi Drivers and all sorts crap jobs. I was once told in an interview University degrees has no importance to him (i.e the interviewer). Probably America should send its graduates here.

    Thumb up 0 Thumb down 0
  51. J. Guild says:

    I’m somewhat surprised that you, the Freakonomics guys, aren’t on top of the distortion of “average” lifetime earning potential, by those at the very high end of the income scale — “the winners of life’s lottery” if you believe those who resent the existence of the 1%.

    In the same way that the top 1% pay 40 or 50% of all income taxes, the average value of a college degree isn’t really representative for most people unless you recalculate the value of the top earners to some maximum annual compensation that would be considered very successful, but not “excessively” successful. I’m thinking of a number like $150K or $200K. Once you recalculate the average value of college with the top earners limited, then you get a more realistic picture of what the 90% are facing after paying college expenses.

    After that, then it would be more instructive to the average college student to demonstrate what different starting salaries and income growth rates are needed to pay back the college investment vs. starting work after high school. This is a very similar calculation to estimating the value of taking early Social Security vs. waiting until 70 and collecting the maximum benefit.

    As for the issue of college graduates not getting a job directly out of college in the field they studied for, get used to it. Didn’t happen for me or most of my friends in the 80s, I found work that utilized some of my skills, but tried about 5 different jobs over 6 years before I got involved with my eventual career, and another 5 years and 4 jobs before landing a position that I considered the true start of my career. Mike Royko had a great column about this phenomenon back in the 90s, it was true for him back in the 50s. He worked a number of jobs after returning from military service and was tending bar at the time he landed his first journalism job writing obits.

    Thumb up 0 Thumb down 0
  52. Kressel says:

    This is a topic that hits me where I live. I started college in 1986, and my first few years were the very worst of my life. I was idealistic and naïve, made fun of for doing my homework in the dormitory on my very first day. After weeks of loneliness, I started hanging out with THE WRONG BOY. And it was all downhill from there. Two years later, I dropped out, and it took two additional years for me to get back. Eventually, I did graduate – with honors – from a local commuter school. Now I’m in my 40′s, working as a secretary. I *wish* I could afford to go to graduate school and become an academic. I want the “college experience” I dreamed of as a high school student. I feel like I was robbed of the reality.

    Thumb up 0 Thumb down 0
  53. Christina says:

    I think college is important. I went to college and would not have met all the people and had all the opportunities that I did. I did a documentary on the rising cost of college The Expense of Learning: a documentary about the rising cost of a college education. Find it on Facebook http://www.facebook.com/theexpenseoflearning

    Thumb up 0 Thumb down 0
  54. John Hoffman says:

    I am late to the party as I just heard this podcast so no one may see or comment on my comment. I found the increase in “sticker” costs of the college to be a total lie. There is no logical sense that a college cost per student would jump exponentially because they are trying to get more students into college. Also the point was made that “someone” is paying the sticker price which is the taxpayer. The more the government shells out in loan programs and other, the higher the college tuition costs rise. This is the same model as health care. It is a scheme and the professors are not getting rich so someone in the college administration must be getting rich. Where is all the money going???

    John

    Thumb up 0 Thumb down 0
  55. Andreap says:

    This podcast was very informative. I didn’t know that people actually can buy fake degrees. And I believe they are taking the easy way out. I’m glad that I decided to go to college because it gives me a chance to learn things I was not aware of at first. It also gives people independence. Now I’m learning to think more outside the box and use a lot of critical thinking. College may also help in getting careers which is another benefit. Now I’m not saying college is for everyone, its actually for people who are willing to expand their horizons. Its also so much easier to have a career with a degree, most likely you will get hired a lot faster, Basically it just looks better for you. But I feel that you can be successful with or without a degree you might just have to work a little harder without a degree.

    Thumb up 0 Thumb down 0