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Can we please stop abusing the term "bubble" in the context of higher education? Not every economic adjustment is the result of a bubble. When Blockbuster filed

Can we please stop abusing the term "bubble" in the context of higher education? Not every economic adjustment is the result of a bubble. When Blockbuster filed for bankruptcy, it wasn't because there was a bubble in the DVD market. If higher education is overpriced, people will stop buying. When they do, none of the people who did buy in will be any worse off than they were before. It's a completely different situation than the mortgage crisis, where the bursting of the bubble put everyone in a worse economic position.

hugh3 16y ago
Well, not everyone, but I agree with your central point. An "asset bubble" has certain characteristics, none of which is really present for higher education -- mostly, it's not an asset in any usual sense because I can't flog off my B.Sc. to some eighteen-year-old for a hundred grand. Asset bubbles are marked by prices being driven up by speculation followed by a crash... since there's no speculation there's no bubble. Now, if instead of asking "is there a higher education bubble" you want to ask the question "Is higher education overpriced" then you might be onto something. It's better to ask a more specific question though, since prices of degrees from different universities vary from nothing to craploads. It's like asking "Are cars overpriced?" without distinguishing between Bugattis and Kias. Certainly at the high end of the market you're likely to find some overpricing, because that's what always happens at the high end of the market. A Bugatti really doesn't have many practical advantages over a Kia for the average commuter. So, in conclusion, some people are paying too much for their university degrees and getting lousy value for money, while others are getting the deal of a lifetime. All I can say is do some research, choose wisely, and don't get blinded by the prestige of a big name if you can't afford it.
nickpinkston 16y ago
It's more correct to say that this is an economic bubble (look at academic cost inflation), within a larger societal change (the form of education is going to be massively disrupted). It's not like the classic investment bubble since the investment in completely illiquid outside of purchase - making it a one way market. Also, education's affect on the majority of the people wasn't as beneficial as they were led to believe - therefore the "collapse" of this bubble won't kill those who've invested. Instead, it's going to hurt those who are directly/indirect selling assets into this one-way market: school, publishers, etc. when the population decreases demand. In the mortgage crisis there was a sell-off bubble, but here this isn't relevant since there was never the possibility of liquidity except by extra "rents" generated by getting better jobs.

hugh3 16y ago

Well, not everyone, but I agree with your central point. An "asset bubble" has certain characteristics, none of which is really present for higher education -- mostly, it's not an asset in any usual sense because I can't flog off my B.Sc. to some eighteen-year-old for a hundred grand. Asset bubbles are marked by prices being driven up by speculation followed by a crash... since there's no speculation there's no bubble. Now, if instead of asking "is there a higher education bubble" you want to ask the question "Is higher education overpriced" then you might be onto something. It's better to ask a more specific question though, since prices of degrees from different universities vary from nothing to craploads. It's like asking "Are cars overpriced?" without distinguishing between Bugattis and Kias. Certainly at the high end of the market you're likely to find some overpricing, because that's what always happens at the high end of the market. A Bugatti really doesn't have many practical advantages over a Kia for the average commuter. So, in conclusion, some people are paying too much for their university degrees and getting lousy value for money, while others are getting the deal of a lifetime. All I can say is do some research, choose wisely, and don't get blinded by the prestige of a big name if you can't afford it.

nickpinkston 16y ago

It's more correct to say that this is an economic bubble (look at academic cost inflation), within a larger societal change (the form of education is going to be massively disrupted). It's not like the classic investment bubble since the investment in completely illiquid outside of purchase - making it a one way market. Also, education's affect on the majority of the people wasn't as beneficial as they were led to believe - therefore the "collapse" of this bubble won't kill those who've invested. Instead, it's going to hurt those who are directly/indirect selling assets into this one-way market: school, publishers, etc. when the population decreases demand. In the mortgage crisis there was a sell-off bubble, but here this isn't relevant since there was never the possibility of liquidity except by extra "rents" generated by getting better jobs.