More on the Demand for Higher Ed

by John Glaser

Earlier this week I posted a response to Matt Yglesias's comments regarding the demand for college degrees, measured particularly in terms of salaries.

EduBubble has also posted a notable response:

Matt Yglesias is quite correct when he points out that many members of the middle class seem to sport super-fancy masters degrees and PhDs, but that’s not the same as saying that these are tickets to the middle class. There are too many rich people in Silicon Valley without degrees to treat this as a syllogism.

Just because there are successful PhDs employed at the National Institute of Health doesn’t say anything about the people who didn’t get a job. Indeed every PhD granting department will tell you that there’s a surplus of candidates. They routinely get hundreds of applications for every faculty job. When these PhDs go off and get another job making widgets, it doesn’t mean that PhDs are a ticket to making widgets.

Even if there’s a wage premium paid to certified nerds with diplomas doesn’t mean that the diploma is worth it. $200k+ will buy a pretty nice house in many parts of the country. Which is more likely to keep the rain off your head? A degree from a fancy university or the house?

There are more and more people who fail to “use” the degree and to them, it’s just $200k down a rat hole. Just because many of the successful people have degrees doesn’t say anything about the number of people who can’t use their degree. If it’s true that 15% of the letter carriers have college degrees, then we’ve got a problem. They may be more enlightened but they’re also probably laden with debt.

I would agree that the exceedingly high cost of higher education translates to much higher risk on such an investment. If things don't work out, if something unexpected happens, or if your area of concentration has very low market demand, you may be out a couple hundred thousand dollars. Current tuition costs are unsustainable, and I would speculate that it has only lasted this long because of some very strong cultural commitments to the notion of institutional degrees.