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We can argue about the details but the underlying story is accurate: the cost of higher education has gone up a lot while the income of college graduates has be

• cperciva 13y ago
  the income of college graduates has been flat or declined slightly Except that's not exactly true either. The average income of newly minted college graduates has been flat or declining, but the set which is being averaged is expanding -- and expanding downwards. Unless you think that college education is the sole determinant of income, it is unreasonable to compare the "average" college graduate from 30 years ago against the "average" college graduate today -- who would very likely not have been admitted to college 30 years ago. The same fallacy is applied in the opposite direction by colleges who are seeking to increase their student numbers: "The average graduate earns $X more than the average non-graduate." True, but it ignores the fact that the average graduate is quite different from the marginal graduate.
  • spikels 13y ago
    Good points! There must be a law of diminishing returns in education just like in almost everything else. As the opportunities to get more education have greatly expanded, the quality of both the students and that education have probably suffered. This at least partially explains the decline in the average income of college graduates. While we are probably better off as a society overall, it does mean the net benefit of education is narrowing. And the margin is where we should focus. A basic law of decision making (in economics, business, public policy, engineering) is to always look at the marginal impact of decisions as that is where the impact will be. Unfortunately this analysis is very difficult in this case (forecasts, discounting, preferences, controls) and the results will not be very comforting: for some people, some subjects and some professions the costs will not be justified by future earnings. I don't see our society rationally acting on this kind of information. So the trend will continue or even exacerbated with more lending and subsidies. This is similar to the problems we have dealing with healthcare or global warming. However the cost of college has increased by about 7% a year inflation-adjusted for over 30 years. This doubles the real cost every decade! Meanwhile median incomes of college graduates have been flat or declining since 2000. This clearly cannot go on forever and something that can't go on forever won't. But it is not clear to me how this will end. My hope is that technology like MOOCs can bring down the cost of education and that incomes increase as the benefits of both that education and globalization are finally realized. Then we would have both a better educated and richer society. Alternatively more people may decide higher eduction is simply not worth it - probably resulting in negative outcomes for some. Or something more messy such as mass loan defaults and university bankruptcies resulting in even more negative outcomes. This may take a vey long time to fully play out.
• deleted 13y ago
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• wavefunction 13y ago
  The "details" _are_ the underlying story, and if they're effectively the same as what the graph purports to present: why not present the correct graph? For a bunch of people (myself included) bemoaning the state of analytical education in America, this is something that should be incredibly important.
  • spikels 13y ago
    I disagree the details are not the story. If the perfect information was available it would almost certainly tell the same story: the cost of college education is rising rapidly relative to the income benefit of that education. Do you disagree? A details analysis could potentially allow us to understand the magnitude of this gap but it is certainly both positive and significant. The biggest error in the graph is using total debt versus median or average debts since we know the number of students has increased. I wish he had used median debt or median cost but as I noted above both median debt and cost has roughly double over the past 10 years - so the story stands. Part of any good analytical education should include the skill to form judgements with imperfect, incomplete and/or inaccurate data. In the real world it is very rare you have a perfect experiment that gives you perfect data. That said I agree we need better analytical education. We also need better data.