A belated reply to Bill.
William Dickens wrote:
> >>>Note its the _parents_ in your story who are groaning, not the kids.
> OK, I'll admit that the "no idea" was based on what I know it was like
> when I was going to college in the 70s. However, it is still my
> impression after 13 years of teaching college that the vast majority of
> college students not only have never done a present value computation
> about their decision to go to school, but have never seriously
> considered the alternative of not going to school - - what they could
> do, how much they could make, what their lives would be like etc.
If the decision is literally a "no-brainer," then failing to consider
alternatives is rational. Marginal students frequently weigh continuing
vs. dropping out (just like they weigh attending vs. not attending!).
> >>>Are you thinking only of economics majors? Business and economics
> majors (some) think this way. Do you think the average lit major is?
> Psych? Pol. Sci?
Yes. In fact, right after a lit major tells you his major, he
frequently comments on his low expected earnings. "I'm a lit major.
Not much money in that, but I like it."
> >>>Standard economic model assumes that most of the costs are forgone
> earnings. Mom and Dad paying for school should be small potatoes (since
> you can always go to a state school at low cost). My impression is that
> this factor ways in people's decisions way out of proportion to its
> economic value.
Maybe back in the '70's. Now in-state tuition is significant. At Mason
it's $4400. If you add in housing (as you should if you would have
lived at home otherwise), it's up to about $10,000. About the annual
pay of a minimum wage job before taxes.
> But more
> to the point, I doubt that parents are making any sort of intertemporal
> comparison in paying for kids school. How many do you think have thought
> "Well, if I invest the money I'm paying for the kids school in corporate
> AAAs at 6.5% his income from my bequest will be $XX,XXXX in 20XX whereas
> if I pay for his school it will be..." No way. What they think is
> "better to teach a man to fish than to buy him fish..." or something
> like that and they fork over the bucks to XXXX U. Not the economic model
> at all.
I grant that few open Excel and punch in the numbers. You could improve
their decision-making by teaching them to do so. But if college grads
earned only 10% more than non-college grads, parents would be a lot less
quick to parrot old cliches about fishing.
Incidentally, most of your arguments (here and later in this discussion)
suggest that people over-estimate the return to education. Is that your
real view?
--
Prof. Bryan Caplan
Department of Economics George Mason University
http://www.bcaplan.com [EMAIL PROTECTED]
"He wrote a letter, but did not post it because he felt that no one
would have understood what he wanted to say, and besides it was not
necessary that anyone but himself should understand it."
Leo Tolstoy, *The Cossacks*
