Today, I want to make what, to my economics-ish friends, are probably some painfully obvious points. However, I had never explicitly considered this angle on college/education before taking economics of education last semester, and I suspect that it’s something many others of even my rather intelligent friends and colleagues have also failed to consider in depth.
The value of education is not purely as an investment. Education also provides some degree of consumption value.
This observation kind of throws a wrench in human capital theory, because it will be difficult to decide whether certain forms of education spending were worth it in the absence of information about the value that that education had to students in virtue of merely consuming it, apart from any job they subsequently got or whatever. The consumption value of education is subjective, and will vary widely from person to person. But the fact that education’s consumption value is difficult, or impossible, to observe and measure does not give us good reason to ignore it.
The consumption value of education came to my mind frequently as I recently read “Academically Adrift: Limited Learning on College Campuses.” Throughout the book, the authors stress that college students today emphasize the social value of college to an extreme degree, some of them going so far as to say that the relationships that they form and experience in college are significantly more important than anything they may learn in the classroom. Unfortunately, gaining extensive social experience in college is, to some extent, at odds with performing well academically: for instance the authors show that, while participating in a fraternity or sorority may improve academic performance somewhat, studying in groups is less effective than studying alone. And, because our time is finite, hours spent socializing are mostly hours spent not studying, reading, or writing, activities which occupy less of college students’ time today than in the recent past, apparently to their detriment.
Now, socializing at college may itself have some investment value, particularly at elite colleges (i.e., “it’s not what you know, it’s who you know”). But college students engage in many social activities simply because they are enjoyable. As such, social opportunities and experiences constitute much of the consumption value of going to college, and students self-report that this is a very important aspect of college life to them. Yet, practically daily now there is a story in every major news outlet, describing the shock, frustration, anger, and sadness of college graduates upon realizing that they are unable to trade their college credentiala for a high-paying job, or even any job (here’s an example from the NYT).
My assessment of the situation: Stuff doesn’t acquire investment value just because you want it to. Students and parents realize, on some level, that the value of college consists to a large extent in consumption. This is why they speak frequently of the college “experience” and make college decisions taking things like sports, dorms, and dining hall food into account. But then, when it’s time for the degree to hit the fan and for interested parties to see what kind of investment value that expensive education really had, they are unable to bite the bullet and admit that college is greatly about consumption.
Notice that another aspect of the consumption value of education consists in students’ simply enjoying attending classes (your author is the queer sort of creature who often enjoys it immensely) and partaking in other academic experiences available only through institutionalized education. This should be kept in mind when we think about students’ decisions to attend graduate school and pursue careers in academia, despite the dismal job prospects. Many of the requisite educational expenditures should be understood as (maybe) overpaying for educational experiences, rather than as failed investments.