Bryan Caplan  

Higher Education: Time to Cut the Cord

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Should government withdraw from an active role in promoting and subsidizing higher education?  I recently debated Pulitzer Prize winner Steve Pearlstein on this very question.  Here's the debate resource page, including full audio

I've also published a correction: total government spending on education is about a third of a trillion dollars a near, not half a trillion dollars a year as I repeatedly said in the debate.

My opening statement:



Higher Education: Why Government Should Cut the Cord

I'm currently in the 36th grade.  After high school graduation, I spent four years at UC Berkeley to get my bachelor's degree, and four years at Princeton to get my Ph.D.  In 1997, George Mason hired me as a professor - and I'm still here.  I have a dream job for life: GMU essentially pays me to do whatever I want, and I never have to retire.  But while higher education has been very good for me, it has been a lousy deal for society. 

Taxpayers heavily subsidize higher education - about $500 billion dollars per year.  What does our society get in exchange?  Conventional wisdom says that these billions lead to a massive increase in what economists call "human capital."  The nation's colleges teach promising young people the skills they need to contribute to the modern economy, enriching us all.  If you actually pay attention to the subjects that most students study, however, this story is does not fit the facts.

Think about the classes you're taking right now.  How many are teaching you skills you're ever likely to use on the job?  There are very few jobs that use history, literature, psychology, social science, foreign languages, and the like.  Think about your major: Does it even pretend to be vocational?  There may be a few engineers in the audience, but most of us study subjects that simply aren't very practical.  And if you talk to engineers, even they spend a lot of time proving theorems - a skill you rarely use outside of academia.

I'm not saying that college teaches zero real-world skills.  My claim, rather, is that at least half of what colleges teach is not useful in the real world.  And while many professors insist that their subjects are more useful than they seem on the surface, this is wishful thinking.  If you actually measure learning, students usually learn little, quickly forget most of what they learn, and fail to apply what they still know even when their education is actually relevant. 

If all this is true, why is going to college so lucrative?  Because completing a degree - even a useless degree - signals to employers that you're smart, hard-working, and conformist.  Most people never finish college.  If you do finish, you show the labor market that you've got the right stuff - and many doors open.

If you're not convinced, let me point out that the best education in the world is already free.  If you want to learn at Princeton, just go there and start attending classes.  No one will stop you.  Professors will be flattered by your attendance.  At the end of four years, you'll have a great education but no diploma.  Interested?  Just take I-95 North and turn right at Philadelphia.

Key point: Since college is, to a large extent, jumping through hoops to show off, government subsidies are counter-productive.  When education gets cheaper, you just have to jump through more hoops to convince employers that you're in the top third of the distribution.  Subsidizing college so we can all get better jobs is like urging us to stand up at a concert so we can all see better.  In technical terms, education has at least one big negative externality. 

Steve is probably going to give you a long list of positive externalities of education.  I'm skeptical of most of them; in fact, he often misapplies the concept.  But suppose Steve's totally right.  All he's shown is that education has some positive externalities that at least partly offset the negative externalities of signaling.  To make an economic case for government support, however, Steve would need to show that the net externality of education - all his positives minus all my signaling waste - is positive.  I'm not asking for precision down to the penny; I'd gladly settle for some ballpark numbers.

Isn't there more to college than just the economic benefits?  What about transforming students into enlightened human beings who love ideas and savor culture?  Many economists scoff at such notions, but I don't.  I'm a huge fan of ideas and culture.  But the harsh reality is the most college students find ideas and culture boring - and professors rarely change their minds.  In any case, the Internet now provides free unlimited intellectual enrichment for everyone.  Spending half a trillion dollars a year to force feed ideas and culture to students who won't consume them for free is just silly.

What about students who genuinely want to acquire useful skills or broaden their horizons?  Government spending on their education is certainly less wasteful than usual.  Even there, though, there's no reason why - given the labor market's rewards for education - students couldn't pay for their education with unsubsidized student loans.  If the extra cost deters a lot of students from going, that tells us something: Though students rarely say it out loud, many silently realize that the full cost of a college degree exceeds all the expected benefits put together.

One last question: Even if a free market in education is efficient, is it fair?  I say it is.  Suppose your parents had the money to pay for your college, but refused to do so.  Would it be fair to legally force them to cough up the money?  Probably not: You're an adult and it's their money.  I say we should extend taxpayers the same courtesy.  If your parents don't owe you an education, neither do millions of total strangers.



COMMENTS (12 to date)
Duncan Earley writes:

You had me at ... "Taxpayers heavily subsidize higher education"

Unless that subsidy is some how applied only to low income earners then is basically a way for the middle class to try and get rich just by education.

Bostonian writes:

"If you're not convinced, let me point out that the best education in the world is already free. If you want to learn at Princeton, just go there and start attending classes. No one will stop you. Professors will be flattered by your attendance. At the end of four years, you'll have a great education but no diploma."

Here Caplan is weakening his argument through overstatement. A college education involves not just attending classes but doing the work (problem sets, lab reports, term papers, studying for and taking exams) and getting feedback on your work.

Floccina writes:

I would be delighted if half of it were useful.

Glen Smith writes:

Bostonian,

Have to agree that the opportunity to go to class weakens Bryan's argument. However, the general argument (at least at the higher education level) position is one I agree on. A further thing that goes on here is that government subsidies probably weaken the value of undergraduate work. My job (software development) should only require a BS or even just an associates level degree or be a solid autodidact. For my specific field, people now want an MS or higher from a top, top tier university.

Matt C writes:

I skimmed Pearlstein's notes and it sounds like he made a plausible sounding counterargument.

A transcript of the debate would be best. Unless it is something extraordinary, listening to audio is too slow. Transcription is probably too expensive for anything that is not already extraordinary--but I might be wrong about the costs.

Gil writes:

This is excellent.

The bit about people not really being interested in a free education without the credential reminded me of part of this (starting shortly before 10 minutes in) Reason.TV video with Salman Khan (of Khanacademy.org), where he says something similar (that if you offered to give Harvard graduates all of their tuition back if they would just never tell anybody they went to Harvard they would refuse).

Daublin writes:

Theorem proving is a bad example. When you build a system that will work in the field, you have to reason about inputs--an infinite number of inputs--that might possibly be applied to the system. Theorem proving is a tool to do so.

A better example would be the required breadth classes, e.g. literature.

Glen writes:

All strong arguments. But I think you're leaving out one major motivation for getting a formal education: external discipline. Learning something on your own is hard. Goofing off is easy. So you pay someone else to crack the whip. This doesn't make perfect sense within a neoclassical rationality model, but in a behavioral model it does. Sometimes you have to outsource your self-discipline.

Walter writes:

Although this is a bit of a negative outlook on the process, I can understand where you’re coming from, and even agree to an extent. Much of college is just legally obtaining a piece of paper that says to an employer, “I put in a lot of hard work so that I would look better than that other guy in the job market.” I actually made this exact argument to my father just a few days ago in regards to achieving a doctorate. However, we differ on two key points.
Firstly, I am perfectly fine with this setup. Although expensive, time-consuming, and difficult, going to college for a degree could be described as a way to influence an employer in a manner you dictate. You said yourself that anyone can go to college, albeit in a different context than I do here, and that’s true. Anyone may go to college if they want to bad enough. That is forcibly making yourself look better to potential employers. Some traits, we just can’t change, but a college degree can be acquired by anyone with enough drive to achieve one. That’s just called being fair in an unfair world.
The second key difference is in the futility and ease of acquiring said degree. You make it seem like you can just walk into the building, say you want to learn, and they will teach you for four years or so, but it isn’t like that at all. Speaking from the perspective of a college student that is paying his way through with grants, scholarships, and loans, I can assure you that that road is not easy. I spend every summer, and a lot of time during school as well, searching around for scholarships and grants that I can apply for, and it is not easy to get them either. You don’t sign the paper, shake hands, and they give you money. You compete with other students that actually want to go to school to get that money, and the competition can be rough. It isn’t that easy to go to school, which further adds to the concept of college being a good example of a potential employee’s drive.

ajv writes:

To imply that a wide variety of subjects in college that are mandatory such as history, literature, and foreign languages are not useful in the real world is to ignore the essential fact that all of these subjects make you a more effective worker on a general basis. Not every job requires a high level of competency in a specific skill, many jobs are well rounded and can often require you to fall back on skills you would not expect. While subsidizing college may open the door to a wider variety of applicants this does not mean that it should stop because without government subsidization of college many brilliant people will never get the chance to advance themselves. Without subsidizing higher education the amount of students would shrink drastically either due to simply being unable to afford it or because they feel that taking out a large amount of loans would outweigh the potential benefits of going to college either at the current time or possibly ever. Many arguments can be made against the subsidization of higher education whoever every argument has just as many reasons to get rid of it as it does reasons to keep it. There is no doubt that subsidizing higher education is a waste for certain individuals but the amount of people who benefit and repay their loans and positively contribute to the country far outweighs the amount who do nothing but drag the system down.

Eric Szvoboda writes:

That counterargument is quite impressive. I really will have to think about both of these to start believing in one.

Medford writes:

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