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"but that simply how supply and demand works" Are you sure? Because the normal way of thinking about "supply and demand" is to suggest that prices will go down

"but that simply how supply and demand works" Are you sure? Because the normal way of thinking about "supply and demand" is to suggest that prices will go down if supply grows faster than demand, which is what happened for nearly all of the 20th Century. And if that process has stopped, then we need to ask why. Please consider the data here: https://nces.ed.gov/programs/digest/d17/tables/dt17_302.60.asp https://nces.ed.gov/programs/digest/d17/tables/dt17_302.60.a... Try to explain these 3 data points: (Young people in college) 1970 25.7% 1996 35.5% 2016 41.2% There was no price surge when youth participation going to college went from 25% to 35% but there was a huge price surge when participation went from 35% to 41%. And the early surge is a much larger surge. So why did prices only go up during the latter era?

mbrumlow 7y ago
Those numbers need adjusted for population size. But I would guess that schools stopped growing. I also think looking at the past to predict the future is probably a bad way to look at things. I know I would not buy stocks that way.
sokoloff 7y ago
There was a price surge from 197[1] to 1996. Taking the 25 year period from 1971 to 1996 and then the 20 year period 1996 to 2016, the CAGR in the first period was 7.6/6.7% and in the second period was only 4.6%/5.3% for 4-year public/private colleges respectively. Data: [0] That data shows there was a higher rate of price increase (in nominal dollars) during the first period than the second. Now, general inflation was also higher in the first period (5.1%/6.9% CAGR of wage increases for men/women vs 2.5/3.4% in the latter period). Taking the mathematically unsound step to average the public and private increases and average the wage increase rates for men and women, and compare the two, it seems that college costs rose 1.1% faster than wages in the first period and 2.0% faster than wages in the second period. Is that effect driven by college costs rising faster or wages rising more slowly? [0] - https://college-education.procon.org/view.resource.php?resourceID=005532 https://college-education.procon.org/view.resource.php?resou...

mbrumlow 7y ago

Those numbers need adjusted for population size. But I would guess that schools stopped growing. I also think looking at the past to predict the future is probably a bad way to look at things. I know I would not buy stocks that way.

sokoloff 7y ago

There was a price surge from 197[1] to 1996. Taking the 25 year period from 1971 to 1996 and then the 20 year period 1996 to 2016, the CAGR in the first period was 7.6/6.7% and in the second period was only 4.6%/5.3% for 4-year public/private colleges respectively. Data: [0] That data shows there was a higher rate of price increase (in nominal dollars) during the first period than the second. Now, general inflation was also higher in the first period (5.1%/6.9% CAGR of wage increases for men/women vs 2.5/3.4% in the latter period). Taking the mathematically unsound step to average the public and private increases and average the wage increase rates for men and women, and compare the two, it seems that college costs rose 1.1% faster than wages in the first period and 2.0% faster than wages in the second period. Is that effect driven by college costs rising faster or wages rising more slowly? [0] - https://college-education.procon.org/view.resource.php?resourceID=005532 https://college-education.procon.org/view.resource.php?resou...