Lots of people have said that there’s a bubble in higher education. But consider Kate Middleton, now England’s future Queen. However much she spent to go to St. Andrews and meet William, it was well worth it. Even if she wasn’t bound to marry him, there’s about 5,000 female students at St. Andrews, and the Queen is worth about $400 million, giving an expected value of $400 million / 5000 = $80,000. Not too bad.
Perhaps you object. Maybe you’re aspiring to something other than an M.R.S. degree. Consider exhibits B, C, D, and E – the Winklevoss twins, Eduardo Saverin, and Jeff Hammerbacher. All of them ended up multi-millionaires in part because of running into Zuckerberg at Harvard. Hammerbacher was a Harvard Math student and eventually became head of Facebook’s data analysis team. Let’s say he had a 1 / 1000 chance of running into Z. and making $100 mill. That’s $100k expected value – maybe not the full cost of a Harvard education, but more than a rounding error. (To say nothing of Zuckerberg himself, as Facebook got a lot of its popularity by having Harvard students as its first adopters).
Still not convinced? Exhibits F and G – Google’s Brin and Page, who ran into each other at Stanford. I can’t be bothered to look up how many Stanford CS PhD students there are per year, or how much Google is worth, but I bet if you divide the one by the other, you get a pretty large number.
The point is that college is valuable because smart and/or rich people go to college. The price has been going up, but so have the potential rewards to being smart and/or rich. If nothing else, higher education solves a valuable coordination problem of getting all these people to meet each other.
But wait, you say. Isn’t that exactly what a bubble is? Something that’s valuable just because everyone else is doing it? Well, Harvard and other schools thought of that, hence legacy admissions and scholarships to ensure that the best-connected and brightest will always find it advantageous to go there. With this core secure, everyone else follows.
Why talk of a bubble now? Partly because prices have risen sharply, partly because of that other unfortunate bubble, but mostly because Americans have started to believe their own propaganda – that the U.S. is a meritocracy and anyone can make it with just a bright idea. If you believe that then why go to college? Maybe you can learn everything you need on the web. University presidents are not foolish enough to believe this (they spend too much time meeting donors), but rather than say what’s really going on, they blather about life experience and other hogwash, which doesn’t fool anyone.
Is higher education a bubble? No, but it is a lottery. And like the rest of society, the tickets keep getting more expensive, and the jackpots keep getting bigger.
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