EDUCATIONAL ADVANTAGES?

Gregg Easterbrook has a big article saying that students getting into an elite university like Harvard are not markedly better off than students who attend many relatively unprestigious universities. The graduates of elite colleges do have slightly higher lifetime earnings but not by much.

Brian Micklethwait and Michael Jennings have made a few comments about their own university experiences which seem broadly in line with that judgement. I myself am not in much of a position to comment. I went to three Australian universities but it was at a time when all Australian universities were publicly funded and so had very similar standards. Insofar as there was any status ranking among Australian universities at that time (in the '60s), the University of Sydney was probably Top Dog. I did my M.A. there but I cannot say that there was any clear difference between it and the other two universities that I attended. In recent years in Australia, however, all sorts of technical colleges and the like have been "converted" into universities so going to a long-established university does now have some cachet here. My son is certainly going to a "sandstone" university next year. The same one I went to for my B.A., in fact.

The passage in Easterbrook's article that interested me most was this: "Research does find an unmistakable advantage to getting a bachelor's degree. In 2002, according to Census Bureau figures, the mean income of college graduates was almost double that of those holding only high school diplomas."

That does at first sight run counter to the seminal findings of Ivar Berg (review of the first edition here) -- who found that tertiary education did NOT improve lifetime earnings. The contradiction is only superficial, however, as Berg used much more sophisticated econometric calculations which not only took into account the loss of income while studying (opportunity costs) but also applied realistic interest rates to that income.

And from what Easterbrook says, employers are now much more skeptical of educational prestige than they were when Berg did his original research. So the bottom line is much more radical than even Easterbrook imagines. Not only does it matter little what college you go to but it matters little if you go at all! And given that many university courses these days are more propaganda mills than sources of higher learning, the worth of the degrees concerned is likely to be of ever-diminishing importance. So unless you feel a strong avocation towards studying some particular subject, my advice would be that you are wasting your time getting a university education. Get into business instead!

In the Australian army (where I was once a sergeant) there is a saying that you should never ask your troops to do what you would not do yourself so I feel obliged to follow that piece of advice by noting that I personally went in both directions. I had both an academic career and a business one and did well in both. But it was my business career that enabled me to retire at age 39 now 22 years ago! Beat that! Learning how to become a successful capitalist is much the best lesson but only life can teach you that. I must also confess to some amusement at the fact that many years of study have given Michael Jennings a job as an equities analyst with a big banking firm. I didn't do five seconds of formal study in that subject or any related field but my share portfolio has increased in value by over 50% in the last 3 years. And I did it all in blue-chips. Beat that too!

Sorry to be such a smart-ass but it's relevant. Most formal education always has been useless. My son is going on only because, like me, he is a born adademic. We enjoy academic pursuits, whether they are useful or not.