Why Do Students Drop Out, and Does It Matter?

Kevin Carey raises an interesting point:

Bryan is correct that the job market doesn’t provide a lot of partial credit for higher education. But in saying so, he seems to accept Murray’s blanket contention that people don’t graduate from college because they’re not smart enough to handle college-level work. This just isn’t true.

If this really is “Murray’s blanket contention,” then I don’t accept it.  There are lots of factors that influence the probability of graduation: IQ, personality, distaste for school, all the facts that Carey mentions—“can’t afford to pay tuition, or they received a terrible high school education, or work and family demands intrude, or the college itself does a poor job of providing an engaging, high-quality education”—and more.

Nevertheless, if all we want to do is calculate the marginal student’s expected return to education, though, it doesn’t really matter why students don’t finish.  If a completed year of education pays a 10% return, but the marginal student has a 6% chance of not completing a year of school for any reason, that student’s expected return to education will only be 3.4%.  If we’re offering prudential advice to potential students about whether they should pursue a BA, we need to take all these factors into account, not dismiss them.

Think about it this way: If someone is  thinking about opening a small business,  wouldn’t a good friend warn them about the possibility of failure?  Would it matter if the reason for failure was low IQ or “family demands”?

Admittedly, you could say, “We’re talking about social policy, not individual career guidance.”  Maybe you think better policies would reduce the dropout rate.  Even if that’s correct, though, when you do cost-benefit analysis of your favorite policies, you’ve got to take any remaining dropout rate into account.

Also from this issue

Lead Essay

  • In this month’s provocative lead essay, the American Enterprise Institute’s Charles Murray draws from his new book, Real Education: Four Simple Truths for Bringing America’s Schools Back to Reality, to argue against America’s obsession with the four-year BA degree. Murray argues that the BA “wreaks harm on a majority of young people, is grotesquely inefficient as a source of information for employers, and is implicated in the emergence of a class-riven America.” Murray contends that vocational training and a new regime of certification testing would provide a superior alternative to a college degree for many high school grads.

Response Essays

  • Economist Pedro Carneiro of University College London — an authority on the relationship between education, human capital, and wages — agrees with much of Murray’s argument, but questions its relevance. Some people may be making a mistake in pursuing a BA, but it’s not a very big mistake, Carneiro says. “For most of those enrolling in college, a BA has a good expected return, but there is some risk,” and not notably more risk than with other investments. The real worry, Carneiro argues, is that stagnation in college enrollments “may cause problems for [economic] growth in the years to come.”

  • George Mason University economist Bryan Caplan agrees with Charles Murray’s claims that not everyone is suited to college, that four years is too long, and that few career-relevant skills are learned there. But then what explains the wage premium for college grads? Caplan notes that Murray flirts with a “signaling” model but argues he needs to take it more seriously. But then why haven’t certification test already caught on, Caplan wonders. Why don’t employers already cut out the college middle man and directly hire top high school grads? “An unfortunate implication of the signaling model is that cutting the BA down to size will be a lot harder than Murray thinks. As far as employers are concerned, the BA works.”

  • Kevin Carey, research and policy manager for Education Sector, argues that the “mass production of bachelor’s degrees” in the 20th century gave the United States one of the world’s best-educated labor forces, and all signs point to the stunning success of mass higher education. Carey says that Murray “does not come close” to showing that the “BA is the work of the devil.” If an alternative system of certification testing made sense, Carey argues, we would expect to see it already, but we don’t because “employers value the bachelor’s degree.” The flexibility of the American system, which allows students to get a good general education without committing to narrow vocational training, is one of its strengths. And so many drop out of college, Cary maintains, not because they are unprepared or unable to benefit, but because the academic environment and teaching are often discouragingly low. “The bachelor’s degree represents the best of American opportunity,” Carey writes. “We need to make it better, not tear it down.”