The Value of College

From the blog called TAPPED:

WHY COLLEGE IS GOOD. "One of my life-long pet peeves is the American insistence that every clod who stumbles out of high school with a B average be sent on to a taxpayer-subsidized college career," writes Michael Graham on The Corner. "This policy drives up the costs of higher ed for students who really want an education, half the kids drop out anyway (but keep their costly student loans) and the value of every college degree drops by a significant percentage."

This is apparently what passes for tough-minded common sense on the talk-radio circuit. In reality, it's quite stupid.

* * * [T]he notion that college degrees are less valuable when more people have them is plain silly. College enrollments have been going up for decades now, but as of the 2000 Census, holders of a bachlor's [sic] degree enjoyed lifetime earnings of nearly twice as much as people with only a high school degree. That number isn't going down. * * *

Think of it this way: You are at a football stadium watching a game. One of your primary objectives is to have a good view. If everyone is sitting down, you probably have a decent view. Now suppose someone says, "Let's all stand up, and then we can all have a better view." This is obviously fallacious: If everyone stands up, you end up having just about the same view as before, except now you incur the effort of standing up.

The only time that standing up will give you a better view is if you stand up while the surrounding people are still sitting down. Only then will standing up be a real improvement over the previous situation. But as more and more people stand up too, the value to you of standing up goes down compared to the situation when you were the only one standing up. And that, I think, is the point Michael Graham is making: Having a college degree was a significant advantage back in the days when few people went to college. But now that most people go to college, getting a college degree doesn't give you a step up; it just keeps you in line with everyone else, and at the cost of extra money and effort.

While TAPPED is probably right that college graduates earn more money, what that statistic shows is not the inherent value of everyone having a college degree, but the inherent disadvantage of not going to college when everyone else does. Just as if most of the people in the stadium are standing up, the few people sitting down will have a much worse view than before. But the fact that they now have a bad view does not prove that it is optimal for everyone to stand up.

So here's a conclusion that incorporates both points: As more and more people get a college degree, the disparity between college graduates and high school graduates increases (TAPPED's point), but at the same time, the absolute value of a college degree goes down because it now provides no real advantage other than keeping up with everyone else (Graham's point).

UPDATE: I just remembered that I got this example from Thomas Sowell. Here's a quote from a 1995 interview with him:

MR. WATTENBERG: Suppose they are thirsting for a better job, and we have set up a society where you have to be credentialed with a certain amount of college, so aren't they able to get a better job because of their credentials?

MR. SOWELL: No. This is the fallacy of composition. You know, if one person stands up in the stadium, he sees the game better, but if they all stand up, they don't all see the game better. As long as -- you know, if you have a degree and the other guy doesn't, then you get ahead of him in the employment line. But we're not going to all get ahead of each other in the employment line by all getting degrees.

MR. WATTENBERG: So this whole idea that I guess again both liberals and conservatives are saying is that, at this particular moment, 1995, we have to get more people into the education system, because that's the way to compete, and we look at the data and we see that the people with more education are earning more money than ever before relative to the people with less education, that's all a fallacy of everybody standing up in the stadium?

MR. SOWELL: People who fly on the Concorde -- kids who have flown on the Concorde undoubtedly will make more money than people who -- kids who have only gone on buses. That does not mean if we put a lot of people on the Concorde, we're going to raise the national income.