Does College Still Matter? And Other Freaky Questions Answered… (Ep. 30)

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“Does College Still Matter? And Other Freaky Questions Answered”: In our second round of FREAK-quently Asked Questions, Steve Levitt answers some queries from listeners and readers.

Our latest podcast is another attempt (here’s the first) to answer some of the questions you’ve asked us on the blog. (You can download/subscribe at iTunes, get the RSS feed, listen live via the link in box at right, or read the transcript here.) Here’s how it begins:

DUBNER: A reader named Jonathan Bennett asks, “Is it true that college education is no longer a factor, or [is] even a disadvantage, when it comes to employment?” Levitt, what say you?

LEVITT: [laughs] I think that never has anyone made a statement more false than Jonathan Bennett’s statement that education would be no help or a disadvantage in the modern economy. Of all the topics that economists have studied, I would say one we are most certain about are the returns to education. And the numbers that people have come up with over and over are that every extra year of education that you get will translate into an 8 percent increase in earnings over your lifetime. So someone who graduated from college will earn about 30 percent more on average than someone who only graduated from high school. And if anything, the returns to education have gotten larger over time. They’re as big as they have ever been.

Measuring something like gains to education is necessarily tricky: how do you sort out the effect of education itself when the college-going population is likely very different from the non-college-going population? To that end, Levitt describes a clever study that found a way to isolate the impact of education:

LEVITT: So back in Vietnam, men were entered into this draft lottery.  And if you got a very low number, it meant you were likely to go to Vietnam.  If you got a very high number, it meant you were safe. There was a way, however, to avoid service, which was to go to college.  So what happened was, the men who were unlucky and got bad draft numbers, many more of them went to college than did the people who got high draft numbers.  Now they wouldn’t have gone to college otherwise.  They went only to avoid going to Vietnam.  So what the economists have done is they’ve compared the people who got kind of medium draft numbers.  So they weren’t sure if they’d be drafted or not, but in the end they ended up not being drafted.  But many of those men still went to college.  And they compared that group of people, who were identical in principle to the people who were lucky and got really high draft numbers.   And those high-draft-number people — they didn’t have to go to college to avoid Vietnam.  So many fewer went to college.  And consequently, if you follow them through their lives — the people with the medium draft numbers, who didn’t go to Vietnam, but many more went to college — and you compare them to the people with the high draft numbers, who neither went to Vietnam nor went to college, and you see returns to education.

Another reader wanted to know Levitt’s view of healthcare reform:

LEVITT: Well, my friends in the Obama Administration aren’t going to be very happy with me, but I really, I don’t think it solved any of the important problems that we’re facing with healthcare.  So virtually every economist will tell you that there were two things you needed to do to healthcare reform to materially improve the situation.  The first was to break the link between the provision of healthcare and employment.  And that is just an archaic element of our healthcare system, which really makes no sense.  And yet because of tax subsidies, it’s the way most people get their healthcare — through their employer.  It shouldn’t be.  There’s no good economic justification for it.  And yet, if anything, I think this healthcare reform bill actually strengthened that link.  … [Healthcare] is virtually the only part of the economy where I can go out and get any service I want—cancer treatment, open heart surgery, have a wart removed, whatever it is—and I pay $3 for it or $5 for it or nothing, even if it costs $50,000 or $100,000.  I mean, imagine if you had the same situation with automobiles.  Where I could show up at the car dealership and I could say, ‘I want the Mercedes for free.’  Well, people say, ‘You can’t have the Mercedes for free.  You have to pay $50,000 for it.’  You say, ‘Why not, I have an inalienable right to free healthcare.  Right?  Why don’t I have an inalienable right to a free Mercedes?’

Note to Levitt: I don’t think your friends in the Obama Administration are the only ones who won’t like your views. Smiley face.

Finally, Levitt also addresses a listener’s question about how recent drug busts in the slums of Rio de Janeiro will affect crime there. For his take on that — you may be surprised — check out the podcast. Thanks, as always, for your questions. They were excellent, and we’ll keep answering them in future podcasts.


I was disappointed with the healthcare section mostly because you were obviously lazy. The healthcare bill is what is it is because of the right wing machine that killed most of the progressive parts. What is left is Romneycare, which is at least a start. A public option, with a national health exchange rather than a state based exchange would have given people the ability to purchase a Medicare type insurance with 4% administrative costs. Both provisions were killed. In terms of the inalienable right to a Mercedes, that moral equivelence is just plain sad. You don't need any car to be happy, live a full life, and be a productive member of society, but you do need good healthcare. We are giving billions of dollars to insurance companies for no better reason than they have the best lobbyists. While I understand the need for evidence based practice, again look to the "death panel" folks who killed even the most rudimentary attempts to rein in costs. We will need to decide what procedures work, and which should be paid for, but allowing rich folks to get good care and poor folks to get crappy care can not be the solution. Also, I might add that my premiums are going up at about 10-15% per year along with incrases in deductibles and co-pays. I know exactly how much my healthcare costs because I pay thousands of dollars a year to a private company that turns around and gives it to Republicans so that they will vote against my best interest.


Robert Barrimond

Levitt is wrong that healthcare is a normal good. He admitted as much when he mentioned that there is a moral component to it. If I can't afford a PS3 at $300, that's one thing. No one should be shedding a tear for me. If I can't afford $300 to treat a chronic condition for my child so that he can live a healthy life and dies, it simply is not the same thing. Yes, nothing in life is free and trade-offs have to be made with any limited resource, but this is not something the market does well when decisions have a strong moral component. What's economically efficient is not necessarily moral or desired. There are limits. We also don't comparison shop. Imagine what we would say about a parent who would opt for medicine that only treated the symptoms of a malady and refused to purchase a more expensive cure? What would we do to a doctor who would recommend that course of treatment to save a few bucks? It simply flies in the face of who we are as a society. Healthcare is not a normal good.


Iggy Grey

"So back in Vietnam, men were entered into this draft lottery" is a broad-brush, shallow mostly inaccurate statement about the draftees that did the fighting and dying in Vietnam. The years that draft lottery (`70-`73) selected inductees, covers only 16 percent of the VN war inductions . The VN War lottery occurred during rapid troop withdrawals at the very end of the war. It is unlikely that even half of the 306k lottery losers between `70-`73 ever reached VN as last US combat troop were out in early 1972.

The 84 percent of VN draftees inducted during the build-up and heaviest commitment of troops to VN (1964-1969) faced the heaviest combat. During VN the US selective service tradition was to call the oldest eligible first (i.e. 24-y.o.'s). However, deferments were given to men. Some common deferments were for college (undergrad and graduate), married with children or men possessing skills "important to society" (e.g. men working in the defense industry). The draft pool was further reduced by men who: could afford a SS lawyer; acquire a "favorable" medically disqualifying, 4F status (Rush Limbaugh got his for persistent hemorrhoids); use political connections to lobby the draft board or secure a slot in the National Guard/Reserves; or, go to Canada.

It is a popular misconception (or active delusion) with many men who received a VN draft deferment that their deferred status reduced the DOD quota by "one." Deferments, diversions and defections had no affect on the DOD quota request to the Selective Service. They only reduced the eligibility pool to young men (i.e. 18-y.o.'s) unable or lacking the connections to get deferred. These young draftees ended up doing the bulk of the fighting in VN (`64-`70) and making up over 90 percent of the casualties (i.e. KIA, MIA and WIA).

The "clever study" quoted assumes VN Selective Service "birth day" lottery meant the draft pool was "unbiased" where men 18-24 had equal certainty of getting called based on their lottery number. Technically there were no college deferments for young men entering college in 1970-73. Still, the lottery draft was as skewed in its three years as the regular draft was in the previous six. Nixon allowed all deferments held by young men as of June of 1969 to stand. For example, a freshman entering 1969 with a 2H status (college deferment) kept his status until he finished a degree or dropped out. Canada was still an option. The Guard and Reserves still had waiting lists with slots "held open" for the well connected. Lastly, the draft lottery's age call-up order was flipped so that the "first-to-be-called" were the youngest (i.e. 19-y.o.'s). These two actions de facto limited the pool (once again) to the teenager.



I don't think college matters there's to many successful people who don't go to college and to many unsuccessful people who do go to college to draw a direct correlation between college and success. It does have a correlation but that doesn't make it the reason. Just because most people get sunburns when they are wearing sunglasses, doesn't make the sunglasses the cause of the sunburn. Maybe if we throw out the ridiculous assumption that all people are equal and admit that some people are just better at adapted to different societies, whether they go to college or not. Maybe you didn't get the promotion or the job you want because you just aren't good enough not because of college but just you.... you are not great at everything I'm sorry.... As for the population that returned to school mentioned what happened after school? Why was an outcome not posted? Were they successful or did they flop? What if they just went to school because they thought it was what they have to do better themselves because society feeds them that?
There is a serious problem with the entire education system, sometimes college-bias companies begin to believe that college degrees matter. They hire and promote based on these principles and eventually the company is flooded with unqualified, low intelligence, but highly 'educated' persons. They run the company into the ground and instead of having to scrap everything they get a government bail out.

As for me and my bias that exist in my beliefs:

I didn't go to college and don't have a degree.

I'm working for a Higher Education Institution.

When I was hired, my position required a Masters in Psychology.

I had to fight for my job, because some believed I wouldn't be successful because I didn't meet some requirements.

That was 10 years ago, I just promoted of my peers with Masters and some with Doctorates and I'm making 15% more than them.

That was the first promotion in our Department in the last 12 years. The next one available will be when I retire.


Jimbo Jahnz

I respectfully disagree with the statement that health care 'is like any other good or service'. The comparison of showing up to a hospital and expecting treatment and showing up at a car dealership and expecting to get a Mercedes is really very different in that a person doesn't die if he/she doesn't get a Mercedes, and will find a way to live without it. The hypothetical person who shows up at a hospital might die without treatment, or may undergo a worsening of conditions if left untreated, leading to death or disablement in some cases. This is why health care is different from other goods and services with the exception of food and shelter, where government sponsored contingencies exist such as homeless shelters and soup kitchens, neither of which represent a financial burden on those who take advantage of such programs. In the case of health care, if one gets sick without insurance, that person may spend years or decades paying off the hospital bill. That person can't be expected to turn down care the same way a person can opt not to buy a car.

I don't pretend that the health care bill is perfect, but there are certainly reasons to treat goods and services necessary for life differently from other goods and services.

I realize that this program was a while ago, but I'm a podcast listener and it's new to me. And to end on a positive note, I really enjoy Freakonomics Radio. Keep up the good work!



Levitt, I agree that link between healthcare and the employer must be broken. However there's a big leap between buying a Mercedes and cancer treatment. Health insurance is something guaranteed by nearly every other westernized country except for us.

Perhaps we are asking the wrong question when discussing healthcare, education, immigration, infrastructure, welfare, ect.

Maybe there's something wrong when all of our discussions start with a price tag, and not whether it's right or wrong.