(2011-04-11) College Education Bubble
Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated. Like any good bubble, this belief– while rooted in truth– gets pushed to unhealthy levels. Peter Thiel talks about consumption masquerading as investment during the housing bubble, as people would take out speculative interest-only loans to get a bigger house with a pool and tell themselves they were being frugal and saving for retirement.
John Robb nails the real point. A degree is still valuable because it's valued in the workplace (even though it's not the golden ticket to employment anymore). The solution to this problem is to help create employment opportunities (like what we are doing with our open venture start-up) that don't use a degree as a gating mechanism. Network Economy ho!
May26 update: Anya Kamenetz has been touching on it, esp as relates to Peter Thiel's awards. Yet since the education demands in our economy continue to rise, (David Autor at MIT is good on this topic, or the Georgetown Center on Education and the Workforce) it doesn’t follow that college is going to go by the wayside. What I see happening instead is increasing pressure on the marketplace to produce affordable quality forms of college–http://www.straighterline.com/ is a pioneer–and more intriguingly, the emergence of more specific, practical, modular forms of qualification (Certification) for careers that combine some aspects of assessment, Portfolio, and reputation based networks. GitHub and BeHance are the two examples I always use.
- some argue that market value is more about Signalling (Credentialism) than Human Capital.
- Why don't employers just use other tests as hiring filters? Because they can get sued for it. On the record before us, neither the high school completion requirement nor the general intelligence test is shown to bear a demonstrable relationship to successful performance of the jobs for which it was used. Both were adopted, as the Court of Appeals noted, without meaningful study of their relationship to job performance ability. Rather, a vice-president of the Company testified, the requirements were instituted on the Company's judgment that they generally would improve the overall quality of the workforce.
- (Nov'2011) also, American students are not studying the fields with the greatest economic potential... Over the past 25 years the total number of students in college has increased by about 50 percent. But the number of students graduating with degrees in science, technology, engineering and math (the so-called STEM fields) has remained more or less constant. Moreover, many of today’s STEM graduates are foreign born and are taking their knowledge and skills back to their native countries... In 2009 the U.S. graduated 37,994 students with bachelor’s degrees in computer and information science. This is not bad, but we graduated more students with computer science degrees 25 years ago!