Why Go to College Anyway?

Introduction

COLLEGES AND UNIVERSITIES perform services that society thinks are valuable. It is asserted that educated persons are more productive than noneducated ones — their superior knowledge enables them to use resources more efficiently, including finding new and better ways to do things. Educated people can communicate better with one another as well. It can be argued that colleges also teach virtues, such as honesty, a willingness to help others, and a respect for the rule of law, that are indispensable to a prosperous, peaceful, and well-ordered society.

In addition, since modern day universities do a good deal of basic research, it can be argued that higher education's success in expanding the frontiers of knowledge allows us to invent new objects and create new technologies that improve the quality and quantity of our lives. All advanced, prosperous societies have large numbers of universities and college-educated citizens; very poor societies usually have few college graduates or institutions of higher education. Higher education is closely associated with prosperity and civility.

While college and universities serve a useful function, it is not clear as to how much university education is optimal. The law of diminishing returns applies to education like it does to everything else in life. Eating is necessary and even can provide a lot of satisfaction, but a lover of filet mignon who greatly enjoys the first six-ounce steak will be uncomfortable or even sick if forced to eat five of them in one sitting. Similarly, a four-year bachelor's degree will on balance benefit a large proportion of Americans, but pursuing a second, and especially a third, fourth, and fifth such degree will not be on balance satisfying. The opportunity costs in terms of lost income will be huge, and the incremental benefits vocationally in having multiple degrees will fall dramatically and even become negative (who wants to hire a perpetual student who goes to college to age 40 to avoid the world of work?).

Figure 1–2 suggests that as individuals gain more education, the extra or marginal benefit of, for example, another year of schooling starts to decline, while the costs of providing additional years of education do not decline and, indeed, tend to rise as the complexity of subject matter grows — it takes more money to educate a PhD candidate per year than it does an elementary or secondary school student. An optimum is reached where the marginal benefits from education equal the marginal costs. At lesser amounts of education, educational expansion is on balance beneficial; at amounts beyond the optimum (three college years as depicted in Figure 1–2), expanding education on balance is excessively costly in relation to the benefits.

It is important to note that the shape of the curves in Figure 1–2 will vary from individual to individual. A person with enormous cognitive skills and a lot of curiosity about the way the world works will achieve education optimum at a higher level than a person who is physically quite adept but who has limited cognitive skills and curiosity about the world. For the bright, inquiring individual, diminishing returns set in less substantially and later than for others.

By summing all individuals depicted in Figure 1–2, we can derive a curve that indicates the median number of years of education that is optimal for society as a whole — a number that maximizes the social welfare (Figure 1–3). The social welfare probably is closely related to, but not precisely equal to, the amount of goods and services produced. Therefore, it is not inappropriate to speak of the output-maximizing level of educational attainment. For example, what percent of adult Americans should have bachelor's degree for GDP (gross domestic product) to be maximized?

The previous discussion provides a theoretical framework in which to evaluate the fundamental question as to how much we wish to educate our society. Yet there are huge measurement issues, and a good deal of debate about higher education relates to differences in perceptions about the precise shape of the curve indicated in Figure 1–3. Some people, whom I generally call the "college for all crowd," believe the marginal benefits of education remain very high through a high level of educational attainment and that most persons derive substantial personal benefits from attending college. This extreme position is that the line in Figure 1–3 is a positively sloped one throughout — it is better to have the typical adult with 20 years of schooling (roughly a PhD) than, perhaps, 16 years (merely a bachelor's degree).

Others argue that human differences and diminishing returns limit the optimal proportion of persons who should get a bachelor's degree (or master's degree or a PhD). I subscribe to that position, depicted in Figure 1–3. It is possible to be overinvested in college (such as being at point B in Figure 1–3), with too many persons earning degrees from the standpoint of maximizing welfare or output (which is at point A).

Of course, in the real world of higher education it is not simply a matter of deciding the number of students who should go to college. There are all sorts of issues and questions that need to be asked and answered: Should some students attend career colleges not offering diplomas rather than community colleges? How much education should be done online and how much through traditional instructional techniques? What is the optimal amount of library purchases a school should make in this age of computer-based information access? Should colleges stress "general education," a core body of knowledge and ideas that nearly all students should study, or put more emphasis on directly vocationally relevant forms of instruction, such as training civil engineers and accountants? Should vocational training mostly occur on the job or in the colleges themselves? Should universities also be in the food and lodging business? Should they engage in large commercialization of...