Improving College at the Margins

I agree that IQ, or at least some good measure of cognitive achievement, largely determines whether you succeed or not in college, although other factors can also play a role. And some people have more of it than others, so college is not for everyone. But for a large set of individuals, getting a BA does have good financial payoffs, let alone all kinds of other non-monetary payoffs that also come with education. I am not talking about the signaling story, which, according to Fabian Lange at Yale, is not a big deal. (The published version of this paper won the Journal of Labor Economics prize for best paper in 2006-2007.) For the most part, students are being rewarded for getting a BA, and the reward is not small, so they are probably learning something useful.

I also agree that individuals go to college for all kinds of reasons, and they are not necessarily trying to maximize their financial payoffs. In fact, research shows that education decisions do not seem to respond much to changes in the financial incentives to enroll in college. For a good recent example, see this essay by Joseph Altonji, Prashant Bharadwaj, and Fabian Lange, but there are many more. For the most part, students just seem to go if they are smart and they are relatively well prepared, probably because they grew up in favorable home environments and went to decent primary and secondary schools. Maybe they go in search of social status, but if they do, they learn something in the process.

One question is whether the process could be more efficient. Like most things in society, I am sure it could. But across-the-board testing looks really cumbersome, and the temptation to decide centrally what to test is always there (otherwise it is probably not a feasible system), and does not sound like a good idea. Human resources departments of firms are doing a lot of screening already, and they know what they are looking for. Furthermore, you can try people out and get rid of them if you don’t like them.

Instead of scrapping the BA, perhaps we could make it shorter, or we could make it more specialized, and let its duration vary a bit more by choice of major. Suppose we decided three years was enough. Students would start working one year earlier and they would pay one year less of tuition, which no doubt would translate into a large increase in the present value of lifetime wealth, but that’s a calculation that is not difficult to do. Of course, they would have one year less of learning, and although its value would be disputable to some, we could also try to calculate it. And many of them would have one less year of leisure, which has its value as well. But remember, there is a lot of choice out there already. There are different programs in different schools, and you can be a full-time or a part-time student. It’s not that the system is completely inflexible.

I am sure there are programs where you do not learn much, either because students are not good, the program is not good, or, most likely, a combination of both. A question is whether those are marginal programs serving the marginal student, or whether they are more prevalent. There is probably real waste out there, and credentials that are not worth much. It would be good to get rid of them, and maybe students don’t always have adequate information about the quality of the program they are choosing. So we could mandate schools to reveal more information to students, say on the average SAT of the incoming class, or the average salary of the outgoing class. Some schools reveal this, but probably they are the best ones. At lower levels of education, there is a movement towards this, in the hope that it will help parents make more informed choices.

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.”