Bryan Caplan  

What It Takes to Pop a Higher Education Bubble

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There is no "bubble" in American higher education.  I'll bet on it - or to be precise, I have bet on it.  Nevertheless, while reading the Digest of Education Statistics (Table 208), I discovered a surprising fact: During my lifetime, a big education bubble already seems to have come and gone.  Take a look at the percentage of higher school completers enrolled in college, 1960-2009:

collegebubble.jpg
For women, enrollment is close to a straight line.  Men, however, reach a local maximum of 63.2% in 1968.  The percentage then plunges down to 49.4% in 1974, where it hovers for eight years.  Male enrollment doesn't pass its 1968 peak until 1997!

There's a simple, hard-to-beat explanation: Roughly 20% of male college students (versus 0% of female college students) were attending to avoid getting drafted and shipped to Vietnam.  Once that terrifying threat disappeared, marginal male students stopped going to college. 

You could point to this whole affair and say, "See, Bryan, education bubbles do pop.  Open your mind."  I unsurprisingly draw the opposite lesson: College enrollment will not noticeably decline without a drastic change in students' incentives.  Removing the threat of military slavery in hellish Vietnamese jungles sharply suppressed male enrollment in the 70s.  What plausible unisex shock is likely to have a comparable effect today?


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COMMENTS (16 to date)
Hedron Pentas writes:

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Jeff writes:
What plausible unisex shock is likely to have a comparable effect today?

The fast-rising cost? Maybe it isn't discouraging too many people today, but give it ten or twenty years; the equation may change.

M.R. Orlowski writes:

I would like to agree with the comments above and I would also like to additionally say what you have said all along since it seems like you haven't remembered it, cutting federal and state subsidies to higher education.

Jason writes:

I don't think the people that think there is an education bubble think that it is a unisex education bubble. The question should not be whether there is a plausible unisex shock but a plausible shock that hits a lot of people, regardless of sex. That shocks could be a dramatic increase in state college tuition as state budgets take a nose dive.

Jeremy, Alabama writes:

What's interesting about that graph is that the growth of female enrollment remained steady in the Vietnam era, even though competition for places grew a lot and then collapsed. I might expect female enrollment to reflect changes in male demand.

Essen writes:

College enrollment will not noticeably decline without a drastic change in students' incentives.
I don't get it. Why would you want College enrollment to decline? Let every kid get his/her college education. Let it be a tsunami rather than a bubble. Let college education not be full of air and be called a bubble. Let it hold water and be called a tsunami.

Hana writes:

A nose dive in salaries across the board. When (unisex, really?) salaries do not cover the difference between attending and not attending college then the bubble will burst. The tsunami is already forming. The requirements of work vs. the skills learned in college passed by each other long ago. The impact of unmarketable degrees is cresting. Universities lost their focus when they chose to become social engineers, the recent alums will pay dearly, shortly.

rpl writes:
Male enrollment doesn't pass its 1968 peak until 1997
Maybe there was a bubble, but if so, you certainly can't see it in this data, and this particular factoid is no indicator of a bubble.

A college's coffers don't respond to the percentage of high school graduates the college enrolls; they respond to the raw number of students the college enrolls. Since the population was growing over that period, and high school graduation rates were likely increasing as well, the decline in male enrollment was almost certainly more muted than shown in this graph. Add to that the steady increase in female enrollment (again, the Bursar's office doesn't care about the sex of the students), and it's entirely possible that from the point of view of the colleges there was no bubble at all.

Peter St. Onge writes:

Three shocks come to mind, all happen only if economic stagnation continues:

1. Govt student aid is crowded out by other budget priorities. Marginal students cannot secure unsubsidized financing.

2. Parents need to top-up retirement, so become more reluctant to foot the bill.

3. Without parents' help and in stagnant economy, students themselves realize they'll never pay back degrees in 'soft' majors. Students who fear 'hard' majors eschew college altogether.

JKB writes:

I'm not sure I buy the link between the draft and enrollment. The decline in enrollment precedes the somewhat unexpected end of the draft by 5 years.

A better off the cuff reason may be the secular bear market (as a proxy for a down economy) from 1966-1982. Males could still expect a decent standard of living off a HS diploma up until 1974. Females, however, really needed college to avoid the housewife track so the return on investment for college remained higher for them.

Norman Pfyster writes:

What's more notable is that female enrollment pattern fairly closely tracks the male enrollement, with certain exceptions (including the period from 1969-1972, when female enrollment rose while male enrollment fell). Presumably, something other than Vietnam is a bigger factor. Or maybe Vietnam was less hellish between 1968-1973.

Adam writes:

JKB has a point. The draft didn't fully end until 1973. However, Nixon proposed ending the draft during his 1968 presidential campaign. To reduce some of the fear of the draft, Nixon implemented a lottery system in 1969. The lottery assigned a number from 1 to 366 to every draft-eligible male. Anyone with a number greater than 200 or so, was free from forced military service. Hence, beginning in 1969, larger and larger portions of the draft-eligible population were freed of the fear of being drafted.

Upshot: The draft hypothesis seems relevant for the 1968 peak despite the fact that it fully ended only in 1973. Also, I also know that my social science BA was essentially worthless in the early 1970s job market. The draft and the failing job market for soft BAs probably worked together to pop the bubble.

mike shupp writes:

The question which ought to concern all of us is what sort of hellish environment has driven so many young American women into being college students? It's clearly something even worse than the slavery men faced in the 1960's. Shouldn't this be a social concern? Is it something that we should spend tax money on?

What could reduce college enrollment? Credit by exam. If cash-strapped legislatures mandate that tax-funded schools offer credit by exam for all courses required for a degree, at the cost of grading exams, students will save tuition and the opportunity cost of the time that they currently waste in school.
The US K-PhD school industry is an employment program for dues-paying members of the NEA/AFT/AFSCME cartel. Nothing better demonstrated this than the measurement of education in units of time. "A year of Algebra" or "three credit-hours of Econ 101" makes as much sense as "a pound of friendship" or "a square meter of curiosity".

Troy Camplin writes:

Perhaps the bubble isn't what you think it is. Look at growth/number of administrators/bureaucrats in colleges/universities over the past several decades, and compare it to student loans borrowed. I bet that looks just like a bubble.

Christin writes:

Although the cost of higher education is going up, it is also becoming more and more difficult to find a job, especially without having a college degree. With unemployment being so high, the opportunity cost of going to college or going back to school goes down because many people can't find a job anyway. The benefits of going to college are outweighing the costs, so enrollment is on the rise. Eventually, if fees become too high, even for public colleges, the "bubble" may burst and enrollment with decline.

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