Linkdump: The Schooling Bubble?

There go my prospects!

Arnold Kling thinks schooling is mostly about signaling respect for hierarchy.

There is no cheap alternative to educational credentials if you want to signal respect for hierarchy. Looking for an alternative signal is fundamentally self-defeating. Any attempt to evade the educational credential system inherently signals a lack of respect for hierarchy!

Steven Levitt thinks schooling pays off.

Of all the topics that economists have studied, I would say one we are most certain about are the returns to education. [...] someone who graduated from college will earn about 30 percent more on average than someone who only graduated from high school. And if anything, the returns to education have gotten larger over time. They’re as big as they have ever been.

Peter Thiel thinks people are borrowing too much to pay for schooling, in any case.

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. 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. Similarly, the idea that attending Harvard is all about learning? Yeah. No one pays a quarter of a million dollars just to read Chaucer. The implicit promise is that you work hard to get there, and then you are set for life.  It can lead to an unhealthy sense of entitlement. “It’s what you’ve been told all your life, and it’s how schools rationalize a quarter of a million dollars in debt,” Thiel says.

Schumpeter at the Economist thinks the schooling bubble is worth writing about twice.

Paul Krugman has pointed out that, contrary to popular wisdom, expounded relentlessly by the OECD among other august bodies, technological progress may reduce the demand for high-end jobs, not just low-end jobs. Computer software is now employed to perform tasks that used to require armies of lawyers, engineers or highly educated workers.

[...] My third article is also from Slate. This suggests that applications for law school have dropped by more than 11% since last year, in part because students are beginning to realise that it makes no sense to pile up hundreds of thousands of dollars in debt in order to join the legion of unemployed lawyers. 

And the gist of the second:

THIS year American student-loan debt surpassed credit-card debt for the first time.

Scott James at Forbes thinks there are ways to make schooling worth while.

This new set of schools is increasing the value of their delivered content via a Professor + Practitioner teaching model. This P+P teaching team combines a full academic PhD (required for accreditation) with an expert practitioner (who does that type of work as a day job). Think back to the Operations class you took; how much more valuable would it have been to hear both the viewpoints of an academic plus a manager with 30 years of experience in the trenches at General Electric?

[...] Not everyone is meant to – or aspires to – attend a four-year degree program. In fact, some of the brighter high school students are wise enough to see the amount of debt they would be saddled with after a four-year program, and take a pass on it. As more motivated and smart students opt out of the four-year college program altogether, the idea of a re-skilling college seems more viable.