Monday, December 11, 2006

The "Higher Education as an Investment" Scam

By Richard Vedder

I am an economist, and economists have always considered sociologists to be lesser forms of human life. As a Northwestern undergraduate decades ago, my favorite professor defined a sociologist to me: "A sociologist is someone who requires a Ford Foundation grant to find a house of prostitution." Another friend, Doug North (Nobel Prize winner in economics in 1993) was gleeful when Washington University in St. Louis eliminated its sociology department.

But maybe we were wrong. Our sainted friend and comrade in arms George Leef of the Pope Center in North Carolina has sent me an article from the Pennslyvania Gazette, a publication of the University of Pennsylvania. Two Penn sociologists, Ivar Berg and Randall Collins, have been arguing for decades that the return to higher education is not what it seems to be. These gentlemen note that conventional wisdom has it that higher education improves workplace productivity, but in reality it does not. Higher education supposedly promotes social mobility, while the reality is quite different.

Berg in a 1970 book Education and Jobs: The Great Training Robbery made the point that employers were using college credentials as a crude screening device, a point made over the next several decades by many others, including myself (and one Nobel prize winner, Michael Spence, in particular advanced Berg's insights). Collins has argued that the rush for credentials has led to "credential inflation," whereby it takes higher levels of education to qualify for even the most mundane of tasks. Moreover, the financial costs of all this credentialing, which are escalating rapidly, have contributed to America's losing its distinctiveness as a nation in promoting social mobility. Dan Golden's recent writings about the role of "legacy" and "development" admissions in higher education is anticipated in Collins' 1979 book The Credential Society.

All of this comports with our notion that most of the university/high school earnings differential reflects not what colleges teach, but the superior qualities that college students have even as they enter college relative to those who do not go on. The Duke Power decision outlawing most employer testing of prospective workers has aggravated the problem: how do we know which applicants are bright, motivated, disciplined, mature, creative? On average, the answer is "the ones who went to college," not so much because of what they learned in college, but because of their innate intelligence and superior work habits going in. Colleges can test prospective students legally in ways forbidden to employers.

Higher education has profited mightily from this phenomenon, which might better be termed a scam. The private schools that are more selective can proclaim, correctly, that "our students are brighter than those going to Joe Six Pack University" -- and employers who want bright and more knowledgeable students will grab them by paying high salaries --again, not so much from what they learned in college but for what they brought to college.

7 comments:

Logical guy said...

As a student, I agree totally with these statements. The 'inflation' effect seems to be roughly one extra year of education every 10-20 years.

My university hardly ever makes references to jobs out there in the real world, it is as if it doesn't exist, and probably one of the saddest things is to see someone who has had what I would consider a complex degree (mathematics, chemistry etc) doing a job that requires none of the knowledge they learnt in university.

College education is expensive - yes. But the biggest cost is the income that you are *not* receiving while there.

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Anonymous said...

I attended a university that had a very odd Sociology Professor. Seemed like a nice enough man. Problem was he claimed that he carried on conversations with cows.

It was at this point that I came to believe that a Sociologist’s synaptic cleft could be measured with a carpenter’s measuring tape in inches rather than microns, and that their neurons were firing blanks - making the diffusion of neurotransmitter acetylcholine an neurological impossibility.

I suppose the neuron-bus which travels from cell to cell never left the station. Or, he was on a permanent trip and never left the farm. I believe the damn bank foreclosed on the farm while he was “away”.

He never did specify what type of cows he talked to - Devons, Angus, Herefords, Holsteins, Guernseys, Ayrshires, Brown Swiss, or Jerseys.

So it is good to read that there are reputable Sociologists out there that have been cured of neuron sterility and are firing like an A1A2 Abrams Tank with Sybil at the switch.

Yes, maybe their little neuron-buses are still running despite the premium pricing of Middle East oil and courtesy of our friendly commodities dealers. I’ll now have to re-think my theory of Sociologists.

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