College tends to make people happier, healthier, and wealthier. But how?
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An original. Can you look back to when he met the one you loved him, remember exactly how it was peering through me so brothers, he joined the army Tom and I had this boy's sub sometimes have already seen everything it can happen and it's a nightmare. Sherry radar now streamline Apple TV plus. Fr Economics, radio, sponsored by discover earning cash back on your purchases is great, but Discover will do you one better at the end, your first year discover will actually match all the cash back you ve earned on your credit card birthright.
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now my freshman diamond Harvard University aggressor, both judge and ask you some questions. This is fair. I show called Reaganomics radio waves, of course, of economic, major philosophy minor, bring you Jeffrey where you from Mozilla Georgia Dating colleges worth it after you, ve got a bunch of people from the community, said the party everyday for demonstrating just exchange books in elections. We learn much more aware and to use you, I guess the ranking here I was expecting. You know I put a lot of time and effort in money into that. Like I want to get out now, like looking that way, right away I always worry, because what the economies like anything, if I'm going to have a job it there's gonna, be a job out there. For me. Today's date, college degree is what Highschool diploma was you know decades ago.
I think about why you are going to college just day. You were going to buddy boy. You think that, because you gonna college, you're gonna be successful and that's not true colleagues I'm happy from the w and my seeing this is for economics, radio, the pine camp that explores the inside of everything. Here's your nose, Stephen Dogma, this is. The second of two episodes about the value of college education in part, one we heard Alan is L, a former FBI agent talk about the huge market for fake degrees, pretty much
diploma that you can imagine even an empty can be bought. You would be shocked at the number of hold it by this garbage, and put it on their resume and then post this online. For mostly, we talk about real degrees, Steve, whether my free economics friend and co, author, assured us that going to college definitely pays one thing is clear that the market puts a tremendous reward on education to the best estimates that economists have are that Each extra year of education that you get is worth about. Maybe an eight percent increment to your earnings each year for the rest of your life so turns up. Most people buying about education. So, at least for the average person them say. Buying alot of education is a really good deal.
but let's acknowledge the obvious by all that education has gotten a lot more expensive, so, if you're thinking about this is an investor its David card here an economist at University of California Berkeley You know you ve got a kid in your thing: abandoned college or not. You have pay a lot of money up front and then wreath returns later on and serve features of that are difficult. One is the cost that you have to pay. A front has gone up quite a bit, and this It is the uncertainty about whether the kid will actually successfully complete the degree. It's a pretty risk investment. hey ray, say hello. High, So Borri Lamb works here for economic central. She is the editor of the frequent comics blog, among other things, and you are a fairly recent college graduate yes, yes, I graduated in two thousand seven from the University of Chicago Good School and you studied economics at Chicago.
Yes, I did so. Economists always talk about the returns to education. That is, that a college degree hugely increases your chances of making living. As you must know, these numbers by heart, of course, all of us know these numbers are as college graduates that their on our side and that statistically called grads will make a lot more money over lifetime. Then those who don't go to college an you take great comfort in knowing these numbers. I assume yes more comfort, I was in college than suffer. So what's the problem, why did they offer less comfort? Now These are numbers on average and after graduation, a lot of my friends were struggling and many of them were unemployed or underemployed, and new weren't doing what they wanted to be doing. It was how it was hard to look at those numbers.
Right so the numbers in the aggregate paint this pretty great picture, but if you're not living that life, then it's not so pretty ray. I called up one of my friends to talk about this. His name is Luke Annabelle and graduated together from the essential cargo. What did look study economics as well and no, he studied English, ok and what's Luke doing for a job now looks a bartender and Tucson Arizona are so let's hear what Luke had to say, Has anybody asked you? What are you doing with your degree because of what you're doing, I think so think my parents finally start asking questions which business yeah, I guess you know in the media and in general there's this conversation about whether college is worth
I know you don't have second thoughts about that you're you're glad you were definitely what that next up as a kind of blurry for all of us. I think so. I think Ford I was a sort of positive and confident proud. I am Thea petition. I always felt like the career programming was kind of farcical. You know it's like the college would hire the people who can get job to teach you about how to get a job, so they could boost the numbers of graduates that jobs are threatened. Yeah as this kind of silly and then I think, when you say, is it worth it? You have to ask like worth what financially. Was it worth three hundred sixty Thousand dollars I mean I don't know, I probably haven't made known sixty thousand dollars in the past four years, Ireland, either
I went to wealthy college. I think it's for its great place and I saw the other day their tuition for the incoming class and on the spit out by drink that's Betsy Stevenson, I'm actually reading at the fit right now and that is just and offers the committee's members concurred that the debt in the statement, would be subject to revision in response to significant Chattanooga may think that sketch, where the whole point of anti hours to bore people into submission Stevenson and Wilfers may sound a bit familiar. We ve had them a programme before and they rate to the frequent comics blog. They also happen to live together. We start with co authors. The women on having office next to each other. But yes, we also share a home life and a child. They are both college professors, both economy,
both of them in the neighbourhood of forty years old and over the course of their careers. They have seen the cost of college climb and call I mean it is true that the prices have just gone up a lot more than the prices of food. The price. Of other sort of maybe not gold, but I can't think of any other things that have kept pace with the jewish inflation. I think a key distinction people need to make is between stick a price and actual process being in all of our alarm, is about the rising stick oppresses, and I have no doubt that the prices that people are actually paying which, as you know, after scholarships and financial aid and always different ways, we can help
I've no death, it's going up, but it's not going up at anyone. Neither right that this ticket prices going and it's not surprising that a bunch and particularly of the the private schools, have increased the generosity of their aid programme. So it's not surprising that their top and prices would go up to help make that balance to which think which think about mixed with the school wanna bet, which has happened my alma mater because to go into habit for wooden closkey. It has never been lower, etc. So that's his case where the stick- a prices enormously high, the actual pressing, had paid for working class. Kid and almost a much lower and what's the incentive for the institution to make public a stick, a price that so out of whack with the actual price for certain Kynaston IQ needs. Wonderful habit is raised. Stick oppress. Very few people pay the stick press only the kids of the super rich people who get none of this financial aid and assistance, and so on. So the highest ticket price is essentially increasing prices.
The nation which, having rich more for college, the question, we really need to ask ourselves how we charging working in the middle class more or less that a much much. How to question on the stick oppress tells you very little about so. This is a great and import. point you're making. But I just want to know where. Where do we find that number you call real education, economist nutmeg. Armed Their number guy made Professor Cornell University, where I also direct the Cornell higher Education Research Institute. Ronald Ehrenberg is a real education economist we should stinguished between the sticker price, the posted price that students are supposed to pay and the net tuition, which is the price that they pay. Once you take account of grant aid from federal government and state governments, institutional aid and
so tax credits that are provided by the? world government, and although the stiffer price has on up a very, very rapid rates, the rates of increase in the net tuition, what students actually pay on average husbands, what more modest, ok, but still in most cases, net tuition prices have gone up to a lot so Ehrenberg. Where is all that money going? The answer is, really that there's no such thing as a free lunch. Economists are very fond of saying that. Education are currently is a highly labour intensive industry and there has not been great productivity growth and allow me to translate from economists speak college is Labour intensive industry, because it involves real, Hugh beans. Professors in this case
a real task in real time, which means you can't just flip a switch churn out more students unless, of course, you're talking online education, which is starting to change the college landscape, but let's not get into that for them. So if you want more productivity, you have to hire more people or pay the same people. More money, so this money all comes in and the major thing at a pace for our faculty and staff salaries and don't forget healthcare, which is a huge part of anybody salary. So complex situation, and there are lots of new ones like the difference between private and public schools in private, higher education. When tuition go up, it's usually because the price
institutions, are spending more on their students, but in public higher education went to issues, go up. Expenditures per student often go down because in the public sector to wish increases are often efforts to try to make up for cutbacks since aid support. So that's the supply side. What do we know about the demand side? The students, here are some numbers roughly two thirds of students attending college today receive some kind of financial aid grants loan scholarships education, tax credits and so on, and how much does that aid help well about two thirds of the students who graduate do so with debt and their average debt is about twenty three thousand dollars. Now it's not a trivial amount, but if the returns to education are as big as economists say, they are, or the math and still work. So
for a family thinking about sending a kid. The college, but struggling with the cost, might help to think a bit like an economist to think about stretching your dollars here. Once again is David You don't have to live in the dorm. You can live with your parents. just what they do in all of Europe. You don't have to Go to the elite private school! You can go to you know all the best public swimming get into and out of the room Only today is the majority of kids going to college or working part time. So, for the most part, this seems like good news. The returns to education are huge and cow Despite some serious tuition, inflation doesn't cost
much as it may seem at least relative to its value. So does that mean that everyone should go to college? I think that people often make the mistake of not thinking through the problem as systematically and thoroughly as an economist minimize. So, first of all, there are two major costs of college everybody thinks about tuition, but there's another equally important cost and that's the opportunity cost him not working. So when you go to college you're, gonna forego working a job, that's gonna pay is kind of salary and why lots of students have part time jobs or try to fit some I work on whether in college there obviously not doing the kind of work that they would be doing. If they didn't go to college is right as he as you describe it. I mean it's delicious. Imagine this mythical eighteen year old kid who thinks about it and says: ok,
go, spend four years and an probably a whole lot of someone's money in two to produce an outcome. That is not quite clear to me verses. I'm going to start tomorrow doing this thing that I am already pretty good at, and I think I could be great at that strikes me as a dilemma a tougher dilemma than I think most of us think about. So how do you go around thinking through that muddle? Stephen, surprise, you I was that I finished high school in Australia and my great passion in life at the time was horse racing. I wanted to either become a professional gambling or a bookie when I grew up and so, when I finish school, I was not gonna get college. I thought exactly what am I going to land in four years at college that I couldn't learn being in the first wrong and polite sores, a career path. I had a boat make. It was going to mentor me and I thought that this was going to be at
Here I would really enjoy and we should say it's and the legality of book making privately in Australia versus here is what so, Australia. Bookmaking is legal, so this would have been a legal grey pardon, and I was one of those Let's go inside very lucky. I got fired two weeks. one and a half weeks in my first job, and at that point I shrugged my shoulders and what the heck I'll just go to college I've got something to do So when you see these numbers, when you see such low, relatively low unemployment, more education have, when you see relatively more money, earning more money, the more education. Have you ever wonder? How could possibly be a debate about the value of college? Well, the debate is about. Is it worth it for the marginal kid and if it is what should they be doing? Well in aware, what should they be?
daddy and wise, it gonna matter for them, and so, if you're, trying to figure out for an individual kid, what's gonna be the return for them. I think it's a lot harder. Yes, so if you'd had degrade somebody exams, I've had degrade the worst. Could my classes the marginal kid and that kid most of my students rushed in spectacular. They went along their exams, a brilliant, but the students right at the bottom and snugly them What I said- and so I think you know if the alternative is casual work, retail jobs did in jobs going nowhere jobs. Then we then I would say: I'd look any eighteen year old kidney, I say in former years isn't taking you anyway at four more years of college. My will take you somewhere, the kids are going to start a trade apprentices and like in full. Using the workforce is going to be investment in the future there. I think it's a lot harder. I think if.
A kid who is good with their hands and not academically inclined, and they could find good apprenticeship short encouraging due to follow that. so Wolfensohn Stevenson aren't arguing that colleges right for every kid. But what about their kid? There d Mathilda is three years old and what happens if years from now. She has a different idea. Well, this is a great question because, while I- her to think about there being choices, and she has no noise in this matter. I do not want her to to grow up thinking about whether college is a choice and, in fact, when you said you were gonna, ask me that question Maybe a little nervous analysing and I want to listen to a radio any real where she hears is discussed as an option. I would be very disappointed if she chose not to go that path. Your question also comes a little Like matured Archie, reassured me the other day just before bath time, daddy, I'm
colleagues, coming up, Steve Levitt tries to explain the magic that happens in a college classroom, or maybe it's not the classroom and he's got a hard when you watch to figure out where it is the value added. Britain, I'm ready with sponsored by wonder, is business movers podcast when Coca COLA changed their recipe to what they called new Coke in nineteen eighty five
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exactly does college due to pray. all those gains. Here's Justin Wilfers again its clear to me that college, the good choice for many. It's much less clear to me. Why I do it the best, I can when I teach, but it's not clear that anything I teach the kids he's gonna, make them better business people or better members of the economy. More productive, it's not deter visa wooden, and then I think that my inexperience, while I went to college with a bunch of really smart people, so maybe it's all peer effects, in which case we just get the professors out, then maybe that too big maybe it's expectations. So maybe the important thing right demonstrate my students is not that the bank has slowed down and supply could slip up, but I expect him to go on and do great things. I'm not really sure what it is. I just another effect.
Steve Levitt has spent the past quarter century on college campuses, either as a student or professor since he specializes in solving economic mysteries. I went to him with the question. Personally, I have to say I don't know anything about that and I watched the college production function. I watch us produce cod students here, the operative Chicago I I was caused it produced and he's got a hard when you watch to figure out where it is at the value is added. When I actually, I teach my students, I teach them very specific but I know that when I talk to them years later, they don't remember anything that I die. I mean I can s in the most simple questions about the material we
and have no recollection whatsoever, the tipple students. So I'm curious, I mean you teach you teach one at least one really big class each year right. The economics of crime is a pretty big glance. A hundred students not and then occasionally smaller classes, yeah yeah, mostly for the greatest students, sir, I teach small classes fifteen or twenty years Ok, so over years of tat, you ve been teaching called for how long more than like twelve fifteen year, fifteen years, ok so use. So you ve seen a couple. Thousand people come through and obviously can't know much about too many of them. But if you think about your roles of professor trying to teach people how to think how to learn to think about things, problem, sobbing and so on, what's just your personal observation of when you ve been successful, that are how often you think you may have been successful, helping that I think it so I think it
Damn I would say about five of those students have later read me and said: hey you really help me learn how to think. So. That's that's the only direct ever to have. I give them exams, hell I'm exams real autumn exams here about how to think a counter argument. What I'm saying about teaching kids? How to think is that the returns that thick that students get from other kinds of education, so real actual skills like trades goals, I think there real return. So why did you study many years back to let it go public schools and it turned out that the single biggest impact of school choice in this first cause was giving kids who are not doing well in the traditional kinds of schools. The opportunity to go to Trade Culinary School or schools, it actually taught them real scale, so clear, We can see how going to school to learn real skills like nursing or something
that could have huge returns, the tougher questioning these general liberal arts, education? What are you learning and attempted economists, seventy and try to think about very much. I'm bidding Martin, president of the amorous college bidding. Martin is not an economist before become, an administrator. She was a professor of german and women studies, but as a college president, she thought a lot about the power of education and what happens to people during those four years. Martin herself grew up in Rural Virginia, her family the expected her to go to high school and do well. But college was another issue: The family was sceptical of education. They worried about the impact of a college education, especially on girls.
They made it clear to me that it was more important for boys to be educated. Then then, for me, they grew up in a time and a place when the bias against what they would have called egg heads and overly educated people included, among other things. I think I fear that people with a lot of education think they're better than those who who don't have an education. So they had a fear about being looked down on. I think they had a fear of loss, that is, the loss of children who go to college, and begin to think differently and as they used to say to me talk differently. We raise you to talk like that who who actually move geographically to other parts of the country they
became afraid and the late sixties and early seventies of the impact the college might have on political. My political views in high school Martin had a guidance counselor who encourage her to apply to college and over time Family came around the idea even supported her, but their fear that she would choose
inch never really went away, and in retrospect they were kind of right. I left home and I didn't return to live in that area. I made choices about my wife, the kind of work I wanted to do the people I wanted to be with that were hard for them and they never ceased being hard for them. It's impossible to learn a completely different way of thinking about things without unloading. What one is already learned- and I think it's important to realise that- because it is often the case now people think about
the commission as the acquisition of new things, as if it were an and problematic and promising process simply of having to what one already knows or thanks and the truth is, it is transformative, and that means up ending a whole set of assumptions about how to see things what's possible. What's real, I recently visited my undergraduate alma Mater Appalachia State University and I caught up with the few my favorite professors, including Joe Murphy, who taught and still teaches documentary film making If you asked me whether I learned a lot from Joe Murphy, I say that absolutely I did. We asked me what I learned a lot harder to say so
I asked Joe to describe from his perspective what happens to a kid goes. The college and GUM The best thing people can learn and colleges and not be afraid of the new or the different in other. These people come to the college. Are most people come to college? fairly walled off background of experience not recover my high school in a small town, Pascuala City, they all know many people. They haven't met many different kinds of racial ethnic group, Sir having been exposed to ideas are radically different from their parents, ideas and so what I hope they took away from college- and I think the better ones do is an openness, Other people, other ideas, Dana Diversity, that another great diversity is in life. That's I mean I'll. Take that to happen to me, even a place like Appalache and State University. Imbuing North Carolina between you'd think would be pretty homogenous. Sir,
the best friends I made your happened to be guys on the soccer team. There were Algerian, then Keith, Lane from Ghana and my good friend, Gregg Cutty from from Ireland to unfortunately, is passed away, and I mean it was- are you in the middle of the north? Carolina is bizarre, no expectation of that. So to me coming down all these people, these wildly worldly world people, I guess the negative part for me is people who come to college to accumulate credit hours and all the really didn't do and is getting a degree because you can do. Degree here, no nothing. Unfortunately, I think you can anywhere, and it say to see young people who are so who set such a low standard for themselves. That's too may crushing
some others, eighteen nineteen, twenty years old and because chanced are good, that way, the rest of their lives the major in economics. The reason I'm you shouldn't economic. I thought it was interesting noticed. You think that happens less. These is absolutely I mean people major in what they think will give them a job in another way during business because they think they'll get them a job. The blame them for that. No, I don't. You know. College is very expensive. And people are insisting on some measure to prove to them there. hundred thousand our investment or forty thousand, our investment is worth it. I can understand. That's a lot of money. but in reality think there is a way to quantify the value of college.
and I mean I know you can look at statistics about people have a college, education and better paid, and I don't get a look at our quality of life issues. You know people to me, ignorance breeds hatred and if you can get people now, legible, they'll, be less hatred, more understanding. That's my theory. the question I ve been asking myself a lot lately if its words that are not to go to college causes. Definitely worth it. Without without an education, no one can go it doesn't matter what you decide to do see you might be able to social eyes in become a mature person. So when you hit the workforce here, not as a mature ass, you are when you came on a high some higher educational, is the best thing and I think, like a human being, is nothing without like education. I choose to go to I wonder if I ask myself
I need a family. I need a blow job we have each also, if I'm educated, gradually no Susa come away, I'm not going to make more money, interestingly enough from actually here, because the stuff interests me when I really with back what I've done, I'm about to graduate route into a thing, Auntie happy. I don't whatever that mean. I mean if that means thirty Grand a year three hundred grand a year. I just want to be happy The past four years. Maybe wouldn't go to college right away. If at all as worthy, of course, man, thought knowledge, there's no progress here students in the end bigger there. Nobody, if you can find a way to do it without going to school, then
you bet, we haven't done that yet our here we're here for the loan that gives us news on the next frequent MAX radio. Did you know that people can behave badly on the internet? The way you Get attention is by acting where you get attention is by attack people, flaming trolling, you know sort of intentionally leading people and so forth. But what keeps people from act? now, even more how weep We ourselves that next time Unfrequent comics reading,
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Transcript generated on 2021-03-14.