Tuesday, August 10, 2010

That Higher Education Bubble

I have a special fondness for market-based analysis. Thereby, I am merely following the great example set by Prof. Gary Becker and others in the behavioral economics movement.

For having once taught in universities I am especially interested in the current state of higher education. Especially in the question of whether or not it is a bubble, like the dot-com bubble or the real estate bubble. My previous posts here and here.

For an industry that considers itself above the crass vulgarities of market forces the notion that there is a higher education market will surely come as a shock.

Glenn Reynolds was likely the first to identify the higher education bubble by pointing out that higher education has ceased offering value for the dollars that students and their parents are investing. Link here. His more recent column on the topic is here.

Reynolds offers the best advice for those who are facing choices about higher education. "Don't go into debt." Overextending yourself to buy an inflated asset puts you at grave risk.

Consider the law students who went deep into debt to get their degrees, only to find that the high paying jobs they were counting on to pay off those debts have mostly evaporated.

At the very least, prospective students should do a cost benefit analysis when applying to colleges. Is the value of the education received and the value of the degree commensurate with the expense of the education?

And they should also ask what they are going to be learning. Are they going to have their minds filled up with politically correct cant, thus making them less desirable employees, and undermining their career prospects? Better yet, will they learning to work hard on their studies or to party hard?

So asks Craig Brandon in his recent book,  The Five-Year Party: How Colleges Have Given Up on Educating Your Child and What You Can Do About It. See also Melanie Kirkpatrick's review from the Wall Street Journal. Link here.

One thing that students must learn from their college experience is how to work. If they are learning that hard work, as in studying, does not really matter, because it does not have a very great effect on their grades, then they are more likely to expend their energy elsewhere.

While Brandon focuses on a select sampling of party schools, another study shows that, compared with their counterparts five decades ago, today's college students in general spend far less time studying. Link here. Via Instapundit.

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