Last updated on May 24, 2015
On a recent Minneapolis-Saint Paul to London-Heathrow flight, I watched the 2014 documentary Ivory Tower. The movie is about the rising cost of attending college in the US,* and what might have caused it. The movie spends some time showing the viewer a number of borderline white-elephant large-scale infrastructure projects (e.g., a new football stadium here, a new climbing wall there, etc.) and speculates that such investments as well as admin bloat (i.e., increases in the number of university staff who are neither faculty nor support staff) have caused the cost of college to rise at a much faster rate than the income of the average US household. Unfortunately, the documentary spends way too much time on Cooper Union’s transition from being tuition-free to charging tuition, and to the occupation of the office of the president of Cooper Union by students who were opposed to the transition.
Because I have an obvious stake in those issues, the documentary made me reflect a great deal about the state of university education in the US. While it is certainly true that in my last job, I often felt more like a GO at a four-year Club Med than as a college professor (something I no longer feel in my current job, thank God), the rising costs of college made me think about a question often posed in the media these days (almost always accompanied with some crappy stock photo of young college graduates in full academic regalia on the day of their graduation), namely “Is college still worth it?” Answers tend to range from a more liberal “Yes, but …” usually followed with “you have to major in something that will be in demand in four years” to a more conservative “No, college is useless, you have to make your own way,” followed by vague mentions of Mark Zuckerberg, Steve Jobs, and Bill Gates (all college dropouts, all billionaires).
Now, I haven’t paid close attention to the debate of whether college is worth it, so what follows is highly unlikely to be original. But one thing I rarely see or hear mentioned is something which, having grown up in Canada, seems really, really obvious to me.
Job Market Hysteresis
The Great Recession of 2008 caused a spike in unemployment and a glut of recent college graduates on the market. Rather than sit at home unemployed, many of those recent college graduates decided to get a graduate degree–typically a Masters degree–in order to better their chances of getting a professional job. And so now you have a lot of people around with Masters degrees to whom employers turn first when they want to hire someone, leaving recent college graduates unemployed–and having to themselves get a graduate degree if they want to have a chance at getting a professional job.
(If you want to impress your friends at a dinner party with your vocabulary, the phenomenon I just described is a kind of hysteresis, i.e., “the dependence of the output of a system on its history of inputs, from current to past.”)
Indeed, the job market in the US nowadays reminds me a whole lot of the job market in Canada when I finished my undergraduate degree in 1999. Back then, we all knew that with a B.Sc. in economics, the best you could aspire to was to become a bank teller or someone doing data entry. By the time we graduated in June, many if not most of the members of my graduating class were already enrolled in a Masters program for the following September. The real reason I did an M.Sc. in economics isn’t so much that I liked economics and wanted to go to grad school. Rather, it was because I wanted a professional job. The desire to do a PhD came halfway through my first semester in the Masters program, when I realized that I actually enjoyed economics rather than seeing it purely as a means to the end of not ending up unemployed.
Nonconvexities and Lumpy Investments
And then there are nonconvexities in the education production function and a definite lumpiness to educational investment. That is, you cannot only partially invest in higher education; you have to go big or go home. So if you go to college for four years and then decide not to show up at your final exams, thereby failing to graduate, the job market will treat you like someone who only has a high-school degree no matter how much you really know as much as a college graduate–what matters is that you finish the degree.
Likewise, if hiring managers in a certain profession now have the luxury of being able to recruit people with Masters degrees, if you only stop at an undergraduate degree, you might not have fully realized the investment now required from some specific professions. My wife, for example, works for a large multinational in a job which, in the mid-1990s, would have only required an undergraduate degree. But the vast majority of people in her department have at least a Masters degree (the few exceptions there are are people who have been there for a long time), and many have PhDs. She herself did two Masters degrees because she knew that the jobs she wanted required at least a Masters degree.
Is College Worth It?
So is college worth it? A fundamental difference between Canada and the US is that the cost of a university education is much, much cheaper in Canada than in the US. All told, it probably cost my parents C$10,000 for me to get an undergraduate degree and a Masters–and that was in the mid- to late 1990s, when the Canadian dollar was worth about $0.67. It must have cost my in-laws something like $90,000 for my wife’s tuition in the early 2000s. Nowadays, it would cost them no less than $190,000–or $250,000 if I include room and board.**
This means that you need to carefully consider what your expected income will be in your chosen profession once you graduate with a college degree, and whether there will be work for you. The problem is that “Is college worth it?” debates rarely consider my hysteresis hypothesis and the fact that with said hysteresis, your only choice if you don’t go to college might be to become a barista at Starbucks–and even then, there are plenty of baristas who have college degrees, so you might need a Masters degree.
If you are pretentious confident enough to compare yourself to the Zuckerberg-Jobs-Gates trifecta, go nuts, feel free not to attend college, and touch the Cornballer–you know best. But for the rest of us, not only do I believe college is worth it, I also think we needed the graduate degrees we got afterwards. And for those of us in academia, I think we can look forward to having relatively more graduate students–which is not to say that this country does not need to have a serious conversation about whether colleges and universities need all those extras that are not related to their teaching and research missions.
* In the rest of the world, what Americans refer to as college is called university.
** Because I lived at home until I finished my Masters and moved to Rome, I am excluding room and board from all those numbers.