Higher Education and Equality

By Richard Vedder

Three arguments are used to justify public subsidies of higher education. First, it is argued that higher education promotes civic understanding and contributes to national cohesiveness and the advancement of our civilization --call it the civic purpose of universities. Second, higher education allegedly has positive economic spillover effects that lead to higher rates of economic growth --the economic purpose. Third, allegedly higher education serves to promote equality of opportunity and results, consistent with egalitarian ideals and the American Dream --call this the equality purpose.

This blog concerns the equality purpose. Postsecondary Education Opportunity's November issue updates time series data on the relationship between family income and educational attainment. It shows that the probability of gaining a baccalaureate degree is very high for those who come from affluent backgrounds (top quartile of the income distribution), but very low for those with below average incomes. Degree attainment in 2007 is estimated at 75.9 percent for those in the top quartile of the income distribution, compared with 9.6 percent for those in the bottom quartile. Moreover, the relative disparity between income groups has actually widened somewhat over time, even as total educational attainment has risen.

In short, higher education may work to worsen, not narrow, economic inequality. The kids of the rich get their ticket to future affluence (a degree), while the kids of the poor for the most part do not get that ticket. The solution to liberal reformers is to increase funding for higher education to increase access for lower income students. Yet that is precisely what we have done in modern times. From 1960 to the present, real per student spending on higher education has doubled, and enrollments have nearly tripled on a population-adjusted basis. We went from having no Pell Grants or federal student loans to having these things on a massive level --and higher education became no more egalitarian --indeed arguably less. Colleges themselves talk piously about helping the poor, but very often impose admission standards met mainly by kids whose parents are relatively affluent.

To me, none of this is particularly surprising, and big increases in higher education funding will do little if anything to deal with this problem. Affluent people like to invest in many things, but first amongst them is investment in their children --they invest to insure that the family position in the economy will not markedly deterioate and might even improve. Affluent people on average have kids who attend better schools, who take more demanding courses,who have more after-school enrichment opportunities, and who are, frankly, higher in cognitive skills (IQ). Kids from affluent families who begin college usually finish, while kids from poor college who begin college usually do not finish, at least within six years.

Moreover, to try to expand the pool of college graduates might backfire, as anyone who has read Charles Murray would know. Many, many persons are not suited for the intellectual atmosphere of a true solid college or university. The piece of paper that represents a degree is less about learning than about intelligence, perserverance, and discipline.

Daniel Bennett (who is now blissfully happy visiting his girl friend in Hong Kong) and I have been exploring the relationship between college participation and economic equality. The findings to date are still tentative, but we cannot find much support for the idea that public funding of colleges promotes economic equality. This is not necessarily bad, for it is a value judgment what is an optimal degree of equality. More equality sometimes comes at a high cost in terms of economic growth and overall affluence. Nonetheless, beware of those who want to spend billions on colleges in the name of economic equality and justice.