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I Know How College Got Expensive

There are some fascinating graphics of the prices of various goods over time. Here is a typical one from AEI of price changes for some stuff from 1996 to 2016.

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You’ll notice that this is not inflation-adusted, so you’ll have to do that using your own eyes. (I don’t have the patience to make my own graph.) The housing line is in reality flat; adjust everything else downward accordingly. The rank ordering and proportions don’t change.

Each industry deserves separate analysis. There is no general theory of why things that are becoming more expensive are becoming more expensive.1 Each industry is subject to its own forces, and the reasons that college costs went up might not necessarily have anything to do with the reasons that healthcare costs went up. Indeed, even within an industry different products might have their prices change in the same manner but for different reasons.

I.

Do not think of higher ed as a product produced by the higher-ed industry and purchased by the public. Instead, think of institutions competing with one another. I wrote about this once before when I said individual universities are stuck with needing to offer professors tenure to compete with one another for talent even if tenure isn’t in the interest of the industry as a whole.

The game of higher ed is very much a ranked one. Universities are not really like restaurants where different people like different ones and everyone gets to be non-judgmentally happy with their own and others’ choices. Instead, some institutions are clearly better than others and everyone knows this at some primal level even as they explain why their choice was really the best fit for them and who wanted to go to Berkeley anyway? Students don’t know know how to evaluate schools, so they use published rankings to guide their decisions and add in large corrections for things like location and where their friends will be going.

As a result, there is a great deal of pressure on institutions to increase their rankings to attract students, donors, and faculty, all of whom are drawn to success.

The New York Times wrote about this with respect to George Washington University a couple years ago. There are many versions of this same article, however, that have been written over the years:

The university was an inexpensive commuter school when Stephen Joel Trachtenberg became president in 1988. By the time he was finished, two decades later, it had been transformed into a nationally recognized research university, with expanded facilities and five new schools specializing in public health, public policy, political management, media and public affairs and professional studies.

U.S. News & World Report now ranks the university at No. 54 nationwide, just outside the “first tier.”

It was no secret where the money had come from to pay for it all: the students and their families. Under Mr. Trachtenberg’s leadership, tuition grew until George Washington was, for a time, the most expensive university in America.

Also:

Mr. Trachtenberg, however, understood something crucial about the modern university. It had come to inhabit a market for luxury goods. People don’t buy Gucci bags merely for their beauty and functionality. They buy them because other people will know they can afford the price of purchase. The great virtue of a luxury good, from the manufacturer’s standpoint, isn’t just that people will pay extra money for the feeling associated with a name brand. It’s that the high price is, in and of itself, a crucial part of what people are buying.

Mr. Trachtenberg convinced people that George Washington was worth a lot more money by charging a lot more money. Unlike most college presidents, he was surprisingly candid about his strategy. College is like vodka, he liked to explain. Vodka is by definition a flavorless beverage. It all tastes the same. But people will spend $30 for a bottle of Absolut because of the brand. A Timex watch costs $20, a Rolex $10,000. They both tell the same time.

The Absolut Rolex plan worked. The number of applicants surged from some 6,000 to 20,000, the average SAT score of students rose by nearly 200 points, and the endowment jumped from $200 million to almost $1 billion.

It wasn’t easy, because the schools it was competing with in the national market for students, scholars and money weren’t standing still. “We built a new building, they built two new buildings,” he said. “That’s what was going on all the time.”

He looked for opportunities to paint the luxury school picture. He built Ivory Tower, a residence hall of one- and two-bedroom suites complete with living room, kitchen and private bathroom (featured last year on the College Finder website as one of the five best dorms in the United States). He expanded squash into a varsity sport, as it was at a small number of elite Northeastern campuses.

The university became a magnet for the children of new money who didn’t quite have the SATs or family connections required for admission to Stanford or Yale. It also aggressively recruited international students, rich families from Asia and the Middle East who believed, as nearly everyone did, that American universities were the best in the world.

Who benefits from George Washington’s actions? Several parties. Donors are happy from seeing returns on their investments. Alumni are happy to see the prestige associated with their degrees appreciate slightly. Current students are happy from their institutions trajectory and its likely influence on their job prospects. The same is true for faculty and prospective faculty.

Who loses? Well, current students have higher debt loads. It’s the entire takeaway from the Times article. But the article itself opened with this by the author:

One day in 2013, I sat down in a Starbucks in the Foggy Bottom neighborhood of Washington with Hugh Moren, then a junior at the nearby George Washington University. I asked him how much money he was borrowing to go to college.

“Eighty-two thousand dollars,” he said. “By the time I graduate, a hundred ten.”

The number shocked me, but not as much as the way it didn’t shock him.

This comports with my experiences with students. Few students perceive themselves as having had real choices to make. If they are set on going to college and also set on going to the highest-ranked college they can get admission to, there are few degrees of freedom left for caring for their finances.

What else could this student have done? How much could he have saved with another option? What would he have missed out on?

It’s also not even clear that this student is doing the wrong thing. Yes, college has gotten a great deal more expensive, but it’s also gotten a great deal more valuable:2

much of our present inequality stems from disparities in education. This has evolved in two directions: From 1980 to 2012, inflation-adjusted, full-time earnings of college-educated males increased anywhere from 20 percent to 56 percent, depending on whether they also acquired graduate degrees. Conversely, real earnings of high school graduates fell 11 percent, and earnings of high school dropouts fell 22 percent.

This income gap actually dwarfs the redistribution from the 99% to 1% that dominates national media discussions:

…The earnings gap between the median college-educated two-income family and the median high school-educated two-income family rose by $28,000 between 1979 and 2012. This [shift] — which excludes the top 1 percent, since we’re focusing on medians — is four times as large as the redistribution that has taken place from the bottom 99 percent to the top 1 percent of households in the same period.

In fact, even after subtracting out  the increases in college tuition, college appears to be a better deal now than it was for the olds:

Recent estimates find that for men the lifetime present value [after subtracting tuition costs] has risen from $213,000 to $590,000 between 1965 and 2010, and for women it’s risen from $129,000 to $370,000. So it’s risen by a quarter-million dollars.

A party that is rationally less than happy with the actions of GWU are all the other universities that compete with George Washington University. When GWU’s rank goes up, theirs may go down. They will have to spend more and increase their own tuition rates in order to remain competitive. The end result over time is everyone spending increasingly larger amounts to get ahead. No one, however, gets ahead for long because everyone else is steadily spending improving too. They are like peacocks growing increasingly long feathers in an effort to become more attractive than their peers, but in the end collectively weighed down for their efforts.

II.

Why don’t colleges attract students on price?

To some extent, they do. I know someone whose son got admission to Harvard and MIT. Harvard offered a full scholarship while MIT stuck to MSRP. He visited both campuses and ultimately decided that Harvard was a better fit, much to his parents’ relief.

He’s an unusual case. Students rarely have offers from multiple similarly-ranked schools that differ drastically in price. There is no cheap MIT to lure away price-sensitive students. Even if there were, MIT could and does offer price-sensitive merit-based scholarships ultimately paid in part by the $48,452 for nine months of instruction charged to rich students. Even if there were a $10k per year MIT-substitute, the real MIT could offer the price-sensitive students scholarships so that MIT would remain competitive while continuing to charge the rich students.

Such price discrimination is what ended up killing the airline People’s Express in the 1980s when they tried to offer everyone a low-priced ticket. Their low price wasn’t lower than what American Airlines could offer to the most price-sensitive customers. Meanwhile, American Airlines had plenty of business customers to make up for those cheap tickets.

III.

College cost photo

Image by DonkeyHotey

There have been some attempts at defection, but when even Harvard with a more-than-$36-billion endowment charges still lists a high tuition, those who seek to lower tuition or even avoid increases for longer periods of time will incur risk, and university administrators are not known for their gambling tendencies.

IV.

College tuition will continue to climb inexorably until it stops. What will stop it?

A good candidate is software. Software has been eating the world, but it hasn’t yet eaten education. I think this is merely a result of the strong tradition of respecting bachelor degrees from accredited institutions as real and everything else as less than that.

There have been attempts to disintermediate colleges before. They have generally failed. The long, expensive process of going through college persists. And this might indeed be a feature of it since it implies degree holders have some minimal amount of conscientiousness. And this is among the things that must be replicated.

The college of the future may be online, but it cannot be easy. It probably needs to award real degrees accredited by existing, real accrediting agencies. It needs to be as rigorous or more rigorous than an in-person degree. It cannot be any much more student-focused than existing institutions. Until then, expect the prices on that graph to glide up and to the right.Notes:

  1. The correspondence between textbook prices and college prices, however, is startling. []
  2. Left-behind Trump voters alert! []

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Vikram Bath is the pseudonym of a former business school professor living in the United States with his wife, daughter, and dog. (Dog pictured.) His current interests include amateur philosophy of science, business, and economics. Tweet at him at @vikrambath1. ...more →

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212 thoughts on “I Know How College Got Expensive

  1. The game of higher ed is very much a ranked one. Universities are not really like restaurants where different people like different ones and everyone gets to be non-judgmentally happy with their own and others’ choices. Instead, some institutions are clearly better than others and everyone knows this at some primal level…

    I will push back against this in that you are conflating a school’s ranking with being “better.” What do you mean by “better”? Are you talking about the quality of the education or the prestige of the degree? If the latter, then yes, the ranking of the school is important for some purposes. If the former, this is questionable, at least on the undergraduate level. Most real colleges offer a perfectly good undergraduate education, assuming we aren’t talking about some specialized field of study. The student is far more of a factor than is the school. The student can grasp the education that is offered, but the student can also spend four years drinking and fornicating. So long as a low minimum of academic performance is maintained–enough to keep from being a serious embarrassment to the school–and so long as the tuition checks clear, then the school doesn’t much care.

    As for the prestige of the school, whether this matters, and how much, depends on what the student is planning to do next. For some careers it matters a great deal. For others, not at all.

    Oh, and if you think that people aren’t judged for their restaurant decisions, you don’t read the foodie press much. Come to think of it, that is a wise decision.

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    • I think it is a mix of both. There are clearly schools that are more about being party schools and still known for admitting the stupid children of the rich to paraphrase from a 19th century Harvard President.

      There are schools that are known for being really hard academically and attracting a certain kind of student. MIT and CalTech are obvious examples here but there is also Swarthmore where the unofficial mottos are “where fun goes to die” and “anywhere else it would have been an A” and the University of Chicago.

      And there are schools whose prestige probably outranks their educational attainment and they are probably hard to get into and easy to stay in and excel because it is embarrassing for the these schools to admit they admitted a not great candidate.

      The problem with prestige is no one knows how to make it not matter and the best you have is people who don’t care about prestige getting very upset that many do and those that do become the economic winners. This is why I think Jaybird’s “matters of taste vs. matters of morality” is so hard. Theoretically it should not matter that someone does not want to pursue a prestigious job and someone else wants to go for the full Wall Street thing but in the end when the person willing to do the hardcore finance job gets all the economic gains or most of them, it is hard to make this a mere matter of taste.

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      • I’ve been accused of underestimating the impact of college prestige. I’ll admit that. But I don’t think people even know the reputation of a school, except for 5-10 at the top. And every school has different programs, and every program has different teachers. There’s a high variability in quality.

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        • I agree and disagree. I agree that there are 5-20 schools at the top that most people know as being very prestigious. Then there are other schools which are prestigious but probably only known in smaller cohorts but they are known and those cohorts tend to join the upper-middle/professional classes again and again.

          And there are schools that are part of the broader culture even if it is in a vague “Oh yeah I heard about them. It’s hard to get into, right?” kind of way.

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          • There is also a strong regional element: where I grew up, pretty much all of the Big Ten schools (midwestern flagships + Northwestern) qualify as prestigious (though with differentiation among them); outside the midwest, I find that Michigan and Northwestern still count, and Illinois and Purdue both have very strong niches, but I don’t think many people are especially impressed with a degree from, say, Minnesota or Iowa.

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        • Based on some anecdotal web stories, if you come from a certain socio-economic background you might know about the prestige of he top ten. I think prestige is important even if most people are unaware of prestige bellow the top ten, the people you will be hiring them after graduation will be well aware of that Vassar is more prestigious than American University unless its for a job related to government.

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        • It depends on what your goals are.

          I grew up in California and was offered admission to two schools, one a top-ranked small liberal arts college, the other a top-ranked university. Both were in the northeast. People in California knew the university well, but had never heard of the college, and I won’t pretend that didn’t influence my decision in picking the former. I also strongly suspect that had I wanted to return home and start work right after graduation, that relative prestige would have mattered.

          The flip side of that, however, is that had I been looking at a different group (e.g. graduate admissions offices, rather than “people at my high school”) I might have assessed the impact of college prestige. I very much doubt that my law school would have discriminated between the two, for example.

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      • “The problem with prestige is no one knows how to make it not matter…”

        Oh, we certainly know how to make it not matter. The problem is…you go first. The first mover will get absolutely slaughtered as everyone rushes to prove that they still care (while at the same time quietly turning down the dial on how much.)

        The other problem is that if we decide to stop caring then it’s a giant middle finger raised to everyone who was forced to come up during the time when we all agreed that we cared very much indeed.

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          • The big problem with Bill Gates as an example is that once you start looking at his bio, it all falls apart. Gates the Father founded one of the most important law firms in the country (K&L Gates) and his mom was on the board of United Way with some big shots from IBM.

            Steve Jobs is probably a better example because I think his dad was a machinest.

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            • Certainly not as much as we would all hope. Windows (and Macs) were caught between a rock and a hard place. When the companies entered the market, memory management hardware was prohibitively expensive, and then the plague of consumer electronics forever: backwards compatibility. Nor would some of the decisions that had disastrous (for my purposes) consequences have been made differently. Eg, once the decision that the mouse will be responsive to idle jiggling at all times is made, a feature most consumers like a lot, there are ugly consequences. System calls that could run too long had to include nasty call-outs to the mouse handling code. Video for Windows was a nightmare that way. Not that Macs were a lot better*. As soon as Linux got shared libraries, I was all over it.

              My complaints about Microsoft have always been directed much more at their application software.

              * For years and years, the only way to write code for the Mac that guaranteed you would get an occasional crack at the processor was to attach a bit of code to the timer-tick interrupt handler. Apple recognized this; there was a system call to attach such a routine, and detailed information in the developer documentation about how the code had to be written. Removing those routines was trickier. It was a regular occurrence to see a Mac whose clock ran slow because the chain of code invoked on the timer tick didn’t always finish before the next tick, and the interrupt was lost.

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        • “The problem with prestige is no one knows how to make it not matter…”

          Oh, we certainly know how to make it not matter. The problem is…you go first.

          This is creating a largely fiction universe in order to fit a narrative. You know who “went first?” About 90% of all employers and adult workers in this country.

          There are only two places I’ve ever heard people regularly fuss about college prestige, either in an elitist way or in a “you’re stupid to go to an expensive college” way: My high school during my senior year, and this site.

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          • Well, kind of.

            I’ve heard concern that Candidate X went to “a good school.” It need not have been “a great school.” But that gets contrasted with Candidate Y whose degree is from the Correspondence College and Beautician Academy of Tampa, and whose credential is therefore suspect.

            White-shoe law firms care intensely about the colleges and law schools their younger associates come from. They don’t give a good goddamn about where their partners come from, though — after about five years of practice, the question is not, “Does she have a credential our clients won’t be scared of?” but rather “How much is in her book?”

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            • I suspect that’s, in part, because our profession is more individualized. After all, basically every attorney in private practice has a web bio listing their undergrad and law school (along with whether or not they achieved any of a small number of awards at either).

              I’ll also observe that my experience suggests big law firms are somewhat less sensitive than small ones in hiring, because no one associate is going to have any impact on business development for at least a decade. At my current firm, by contrast, a prospective client might well read everyone’s bio.

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          • So your answer to Richard Hershberger is “of COURSE some colleges offer an objectively better education than others, and that superiority is described by the ranking and reflected in the price”?

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            • I would say that there is probably some “better education” effect in there, but the big question employers are asking isn’t whether students at a school get a better education but rather how capable the median graduate is. A school could just be highly selective about admitting only bright, hard working students and produce a lot of very marketable graduates simply by being a good gatekeeper.

              The median engineering grad from MIT is probably going to be a much stronger candidate that the median engineering grad form a bottom tier engineering school for an entry level position, but a big chunk of that has nothing to do with the actual program at MIT. “I got into MIT” might as well be something you can put on a resume on its own.

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              • One reason why some schools offer a better education is more a function of real estate than prestige. A lot of top scholars are willing to teach at second or even third tier schools if it means that they can live in or near a major metropolitan area like New York, Boston, DC, or San Francisco.

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                • That’s probably some of it, but from what I’ve seen, the quality of the average incoming student is a bigger factor. If you admit a bunch of bright, motivated students, every class can cover more material with more depth, even if the instructor isn’t an elite researcher. The average PhD can drag a class of freshmen on a death march that none of them can keep up with, so it’s really a function of how much the students are able to absorb.

                  There’s also the remedial education factor. That’s a huge on in engineering schools. My program had fewer electives than most others because there were so many courses that were necessary for the degree. Adding to the pinch, most of those courses had a bunch of prerequisites. If most of your incoming students haven’t taken calculus, their whole program pushes back up to a year. If the median incoming freshman has passed AP calculus BC and AP stats, you can jump right in to the real stuff. Being almost a year ahead on the classes at the end of four years means you can cover upper division work that schools that spend more time in catch-up education never get to.

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              • The law school variant of this is that there are schools that are easy to get into but hard to stay in. Some law schools are known for admitting almost anyone but then applying a merciless curve and kicking out those who don’t make it.

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            • Of course it’s more important to some people, and those people will indeed pay more.

              Most college-minded young people can get into an Ivy League school (and get it financed) if they make it a priority in high school. And most — like, 99% of everyone in high school — choose not to do so. Those people will go to different schools, and then they go out into the work force, and they spend very little of their life pining for their lost chance to be a Crimson or whatever.

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              • Most college-minded young people can get into an Ivy League school (and get it financed) if they make it a priority in high school. And most — like, 99% of everyone in high school — choose not to do so.

                It’s a good thing that most choose not to, because then they wouldn’t be able to get in.

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            • I think quality-of-education is completely divorced from price. The most obvious example are in-state public schools, which remain the best bang-for-your-buck. The next most obvious example are small colleges, which almost always offer far more small-class exposure to professors and other individualized education but tend to cost about the same amount at large universities. The third most obvious example is that the most prestigious universities tend to have endowments so huge that tuition is of secondary importance while the aspiring universities have high costs (e.g. facility improvements) that may be a huge drag on their (smaller) endowments. Also, few of the most-prestigious universities are spending massive sums on prestige sports programs.

              Anecdotally, when I was in college my school was better in basically every way (campus, prestige, quality of education, etc.) than the large private university one of my best friends went to but was also about $5k/year cheaper than he would have paid had he not been in ROTC.

              I’ll also observe that the expensive professors are the ones who publish cool stuff, not the ones who undergrads learn the most from.

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                • I would go even further and say how can this *not* be true? While comparing K-12 and college isn’t exactly apples-to-apples, the fact is we have a vast network of public K-12 schools that cost attendees literally no money but which provide real value.

                  And if the response is, “But someone is still paying for it!” this is true at all the ‘cheap’ schools as well… it’s just that most of the costs aren’t borne by the student.

                  So… either the amount a student (or their family) pays for schooling directly correlates to the quality of the education they receive AND public schools are shirt -OR- cost is divorced from quality and public schools provide real value.

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          • I am with

            This is what Paul Campos went on about when he discussed and discusses the law school scam. His view is that a lot of law schools misled their students in their chances in getting a six-figure job at 25-26, right after graduation.

            The six-figure jobs do exist but as Burt pointed out, the BigLaw/White-Shoe Law Firms that pay such jobs do pay such figures to first year associates. But these law firms almost exclusively recruit from a small handful of top law schools with maybe grabbing one or two people from a non-elite law school just to make a show.

            This isn’t to say that graduates of non-elite schools are damned to poverty but the path to success is often harder and rockier. This might be for the better.

            There does seem to be a path that allows people to go from elite university to consulting/finance/tech for a really good salary at 21 or 22. Then the person goes to grad school for an MBA and gets a cushy job after the MBA.

            This is not the only path but I think one that a lot of people focus on because of the high cost of student loans.

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            • A lot of that is 2008, though.

              When I went into my first firm (in 2008, just snuck in), I was part of a class of 16, which was half the size of classes a few years earlier. My firm therefore competed with all the others for top candidates at top schools, had plenty of room for other candidates at top schools, and routinely hired top candidates at other schools. In the years afterwards, classes dropped to 3 or 4 at both my firm and all the others. Which meant that there are about as many spots at firms like that as there were top candidates at top schools. With obvious trickle down effects.

              To my knowledge, that trend has not reversed itself, as the big law industry has not returned to the model it had pre-crash.

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              • Is that 3 or 4 per an office assuming BigLaw or three or four incoming associates for the entire firm?

                I think it is slightly better than it was on the BigLaw side but not by much. Approximately one person from my class got a Big Law job. The following year or two got slightly better and some people from my year went lateral to mid-size or big-law.

                But the most recent classes are getting their asses kicked because of decreased admission standards.

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                • In my firm it was 3 or 4 on a strange split program between SF and SV offices. My year was 16 SF-only (with more in SV). A couple years before me was ~30 SF-only.

                  Speaking about SF specifically, it means that once you’ve hired the Cal/Stanford law review and top 25%, along with elite applicants from other national law schools, there just weren’t more spots. I remember doing hiring committe work hoping we’d get someone on law review from one of those places early in my career, and hiring not only a slew of Hastings people but one of the top-10 or so from USF. By the end it was hemming and hawing about the folks who wrote on to law review at Cal/Stanford.

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            • I think you all are confusing “majority” with “what’s in my radar right now.” Those elite prestige schools? The vast preponderance of young people don’t go to them. The vast preponderance don’t even apply to them. They go elsewhere,

              Hell, in the big East Coast cities they still have a bunch of prestigious clubs. They are indeed prestigious, but almost no one applies for membership. Heck, we have two of the things here in Portland, and pretty much everyone who doesn’t belong to them things they’re goofy as f**k.

              Is there a small percentage of people for whom those clubs or those prestige school names are worth spending whatever more $ they are, just to say they did so? Sure, and some I know who went that route are pleased as punch, and others wish they didn’t because they’re buried in debt, but all of them absolutely use it as part of their current self-identity. And that’s fine. But they are still a very small piece of a very large pie.

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              • Your ignoring the fact that a lot of wealth and power comes to the people who go to the prestigious schools. Going to one of the top law schools is something of prerequisite to sit on the Supreme Court or Federal Courts of Appeals these days, hold high political office, or get the most well enumerated jobs. Matt Yglesias was able to get a certain amount of fame and influence as a columnist because he went to Harvard. Previously it would be a long slog of a career in journalism before he could write editorials for a living.

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              • I think Lee is right about the wealth and prestige factors that go with elite educations even if other aspects of old WASP society are going the way of the Dinosaur as you note. The prestige universities still provide access to the elite jobs in private and public sectors.

                Here is an article about it across the Pond specifically on how having a PPE degree from Oxford puts you as a candidate to run the UK:

                https://www.theguardian.com/education/2017/feb/23/ppe-oxford-university-degree-that-rules-britain

                Note how PPE degree holding is true for the leaders in Labour, the Tories, and UKIP, along with private sector leaders. Even UKIP populists who bash Oxbridge globalist elitists have PPE degrees from Oxford.

                So maybe you are right that a lot of people try not to get into the elite schools and do so purposefully but those that do end up running the show more often than not and this can be a problem in terms of inequality.

                Also out of genuine curiosity, assuming a middle-class/upper-middle class who attended public high school, what separates:

                1. The kid who wants to go to the University of Oregon

                2. The kid who wants to go to Reed

                3. Lewis and Clark?

                4. Oregon State?

                5. Portland State?

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                • This might be a problem without much of a good solution. It seems to be a repeating factor across the world and the political spectrum. Certain jobs attract certain people. A lot of the problems with law enforcement are because of the types drawn to being a cop or a prosecutor.

                  The people who go into politics for a living have a certain type of personality regardless of their beliefs that most people find deeply repugnant. They tend to be emotionally needy people in some way. Young liberals are more attractive towards think tank work or activism/protest politics because this personality trait is repugnant. Young conservatives stay away from electoral politics for the same reason.

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                • The weirdest thing that I encountered, even though it benefitted me, was my soon to be new manager mentioning my undergrad alma mater as a reason that he knows I’m smart. I found this odd because, we’ve worked in the same division (though I was in a different management org), we’ve worked together a bit, he was my old manager’s boss and I’ve been at the company 6 years. There are a ton of more accurate, more recent measures he could use, but the one he mentioned to me was my degree from close to 17 years ago.

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                • You both continue to point at things that a very, very tiny percentage of people choose to do (or even pursue) and somehow extrapolate that to something that everyone is doing.

                  Saul, I would say the choices between those institutions you listed have a lot to do with both desired culture and career goals. (The one exception might be Portland State, which really has become more of a post-job college. The students there are generally older than at the other colleges, and most work jobs wile they attend.)

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                  • I wonder how much of the perception of quality is due to popular media. How often do you see a main character in a TV show or movie with a degree from a public ivy*? It’s always a well known brand name so the audience knows the character is top tier, but that’s not reality.

                    And when they want to make sure the audience knows the character is mediocre at best, they name a public school from the midwest or great plains.

                    *Outside of CA. It’s amazing how well regarded the CA university system is in Hollywood, as if no other state has a top tier public system.

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                    • I think that has a lot to do with it, but I think it would exist regardless.

                      There are always going to be a small subset of people in any community who will want to tie their self-identity to X, because they believe people will see X as prestigious. (And some people will indeed see them that way.) If the Ivy League fell into ruin in ten years, they’d just be replaced by another group of prestigious schools.

                      It’s the same reason why voucher systems will never do what conservative and libertarians believe they will. If you set up the system so that everyone can have access to private schools, people who currently send their kids to those schools will simply jack up prices to ensure those new people can’t attend. They aren’t buying education so much as they are a certain self-identity, and they’ll continue to find a way to buy it no matter what the public school system looks like.

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                    • As a proud Californian, I can’t resist observing that no other state has a top tier public system.

                      Many other states have a great public school (and although I can’t be objective, I’ll concede there are arguments both ways about Cal vs. Michigan/Texas/etc.), but name me one state whose second-best public school can compete with UCLA, or clearer-still, whose third-best public school can compete with UC Davis. Then we’ll talk about relative strengths of public school systems.

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                  • I think we might be talking past each other. Saul and I recognize that only a relatively tiny number of people do these things. This relatively tiny number of people have a lion’s share of wealth and power though.

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                  • “You both continue to point at things that a very, very tiny percentage of people choose to do…”

                    A very, very tiny percentage of people go to any individual college, though.

                    What we’re trying to figure is, why do some colleges become so desired that they are able to ask for (and get) such huge sums for attendance? Like, are those colleges really that much better?

                    And yes, it is a question that’s relevant to every place else, because if the top end college charges X, then you can charge less-than-X and sell yourself as a trade on price even if “less-than-X” is still quite a lot of money indeed.

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                    • Well said. Even if very few people try to get into the elite or semi-elite schools, the prestige, power, and wealth of those schools allows them to sort of set the pace for everybody else directly or indirectly.

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                    • why do some colleges become so desired that they are able to ask for (and get) such huge sums for attendance

                      This feels like the opposite of the comment above I agreed to, which seemed to observe that tuition is tethered from such things. I think the huge-sums-for-attendance is a wide problem not connected to any college’s reputation. To illustrate, I’m seeing average all-in costs for private colleges at $45k. Bellmont University (picked randomly because it was on the first page of google results that led me to the first link), which is no-one’s idea of powerful, prestigious institution, appears to be $43,620 for the cheap dorm and a meal plan.

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                    • That may well be true, but it isn’t what you said up top, and is at best tangentially related to what I said in response.

                      This thread has basically gone like this:

                      Oscar: Some schools are considered prestigious, and people pay an obscene amount of money to go them.

                      Duck: That will change once everyone stops clamoring to be accepted into the most prestigious schools.

                      Tod: What? Hardly anyone clamors to get not the most prestigious schools. Most everybody chooses to apply to other places. Most people and employers don’t care how one school ranked above another.

                      And then everyone replying with some form of, “but some people do care about which are the most prestigious schools,” which, well, no fishing shit.

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                      • people pay an obscene amount of money to go them

                        This is the part I’m rejecting. Interestingly, looking at the college scorecard site posted elsewhere seems highly consistent with my rejection. By their numbers, Chapman University is one of the most expensive non-specialty schools in CA (though Loyola is more). It is certainly not as prestigious as a LARGE number of CA schools. (Forbes, for example, has it at #319 overall). And you have to get past a lot of similar places (Santa Clara, Dominican, UOP, USD, USF) before you start getting to places like Scripps.

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                        • Good point.

                          I think here you get into the fact that various schools charge for various experiences, only one of which is prestige brand name. To stick with my own state (where my limited expertise is strongest), Oregon charges what seems to me to be an obscene amount of money for a stat school, and Harvard they ain’t.

                          But people pay the money to go there for other reasons: the fact that they have a nationally ranked football and basketball program actually attracts a lot of kids in the state. The money Phil Knight and others have poured in means that a lot of the buildings the kids take classes in are works of art. (U of O’s science building with it’s atrium built in sculpturing is amazing.) If you live in the dorms, you get fresh, local, organic cafeteria options by rotating chefs from various highly rated restaurants throughout the state. You don’t get any of that at, say, Southern Oregon, or even Oregon State, really.

                          There are other things schools charge premiums for as well, obviously.

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                          • I think that’s true, but I also think there’s a fairly tightly defined cost band for private schools (you, for example, are comparing the state’s primary public school to its other public schools where there are MUCH higher cost differences).

                            I’d be interested in seeing the correlation between, say, US News ranking and all-in annual costs. I bet it’s weak, and possibly even negative.

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                      • What we want to KNOW is WHY SCHOOL COSTS SO MUCH.

                        YES WE AGREE that not everyone goes to prestigious schools.

                        YES WE AGREE that it’s possible to get a meaningful education at a non-prestigious school.

                        YES WE AGREE that simple competence (or even top-end ability) is not a matter of going to a prestigious school.

                        WHAT. WE. WANT. TO. KNOW. IS. WHY. SCHOOL. COSTS. SO. MUCH.

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              • I am also not sure if this is completely a Northeast thing. There is even a ranking among UCs and isn’t University of Oregon considered better than Oregon State?*

                I suppose this is a problem with living in a country with a large number of people. Lots of things can be simultaneously true. The elite schools still receive far more applications than they receive and there are probably more people who would have applied but were told that they did not have a chance.

                But you are right that there are probably a lot of kids out there (and their parents) who are happy with the flagship state university in their state or an adjacent one).

                What I’ve noted in the past is that New York’s top public universities do not raise to the level of perceived excellence as Cal, Washington, Michigan, UCLA, UVA, William and Mary, etc.

                *One thing I found odd about moving to SF is that a lot of parents are willing to spend a ton of money on K-12 private school but then are fine with their children attending Berkeley or Santa Cruz. On the East Coast, it is generally reverse. You attend K-12 public school and then spend the money on a prestigious and usually private college or university.

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                • What do you mean by “better?”

                  Oregon is certainly more expensive than OSU, mostly because it has a lot swankier facilities. As I was saying on Twitter the other day, the unimaginable amount of Phil Knight has gifted to all of the various schools in the university has actually driven tuition way, way up, not provided tuition relief.

                  It’s also more liberal politically, and Eugene is a larger, more cultured town to live in than Corvallis.

                  I think it’s somewhat subjective if those things make it better — though they certainly make it more — a freaking lot more, I’m here to tell you — expensive.

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  2. “When GWU’s rank goes up, theirs may go down. They will have to spend more and increase their own tuition rates in order to remain competitive. The end result over time is everyone spending increasingly larger amounts to get ahead.”

    This is a description of a positional good: “for these goods the value is at least in part (if not exclusively) a function of its ranking in desirability by others, in comparison to substitutes.” This results in zero-sum games and a costly arm-race.

    Part of the reason is the uncertainty of how to value education, to which secondary indicia become important signalers (expensive buildings), but all of those items in the chart that are growing above the rate of inflation are doing so with the assistance of government subsidies. Government is subsidizing education because education is important, which I won’t disagree with, but it needs to approach such subsidies with the recognition of it’s role in driving up costs.

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    • The final point I think is the big one. Maybe someone can correct me but I’m not aware of any real limits on government loans to finance tuition. Part of the answer has to involve some type of cost controls that make educational institutions consider costs on students. Right now the federal spigot keeps these entities (and the states that run most of universities) from having to make hard choices.

      Thinking out loud but In healthcare we have a relatively new concept of an ACO that theoretically incentivizes keeping costs down. Maybe there’s a similar idea for education out there where schools are given a lump sum payment, independently calculated based on major or something similar, and the school then has to educate the student with that money and nothing else. Whatever portion of that sum isn’t necessary for the student can be reinvested as the school sees fit.

      There are of course loads of details about fraud and keeping standards up (i.e. preventinf these institutions from becoming degree mills in a race to the bottom) but maybe it’s a start.

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  3. What would stop it? Most likely state financing. If, at some point, the student debt reaches a point where the careers those students are obtaining can’t service it then there’ll be mass defaults. The most likely result will be that the government will crack down on student lending.

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    • What seems to stop it is the state financing of nearly all tertiary education regardless of the prestige of the school. In most developed countries nearly all colleges and universities are public rather than private. Even the really old and prestigious European universities are public. The United States, Japan, and South Korea seem to be the exception in this case.

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      • I think they are “theoretically” public but if you look at Oxford and Cambridge you find that most of their students come from the upper-middle classes and above. A few years ago, a Labor MP made a big fuss about this.

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        • History weighs heavily on the present. I’m not talking about who goes in really but how affordable they are as options. Its true that the socio-economics of elite European universities are similar to elite American universities but they are still more affordable because how they are funded.

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      • Eh, that’s just reshuffling. If the state takes it over then the competition will just be over who has the connections and pull to get their kids slots in the top tier universities (along with the portion of genuine merit students who get admitted) rather than who has the money to put their kids in the top tier universities (along with the portion of genuine merit students who get given a scholarship ride).

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        • Do you have any evidence that Tokyo or Yonsei University take kids with connections? Not everywhere is a third world autocracy.

          Though there is still the issue that richer kids can afford better cram/study schools but as far as I can tell, lots of Asian parents are willing to spend the money to put their kids into cram school whether they are doctors or working-class. You can’t walk a block in Singapore without seeing a cram/extra tutoring school.

          Interestingly, a lot of them are opening up branches in the Bay Area.

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          • As you yourself noted Oxford and Cambridge pull most of their students from the upper-middle classes and above. I see no reason to expect that it’d be different with any other public University. If you eliminate money as a consideration then in a scarcity of resources situation Money’s older slope browed brother Influence steps in to replace it.

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            • As far as I know, from my British relatives, Oxbridge does that not because it is more expensive (it isn’t ) but because entry to university is mostly related to your grades (with some leeway around non academic items like sports or community service). Since everyone wants to go to Oxbridge, they get to pick the kids with the absolute best grades, and those correlate very well with private education and extra school tutoring, in other words, with money.

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          • When I lived in Korea for a few years, there was a sense among my students and their parents that Yonsei was the school you either had to:

            A. Work your butt off and test well to get into mixed with a lot of luck.
            B. Be connected.

            I guess you can say that for any elite university however.

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    • I’ll repeat:

      The federal government, through its student loan programs, has got to have some interesting statistical data regarding how valuable a degree is from a given place based upon rates of loan default and requests for help in repaying loans.

      Make that data public.

      I should be able to go to the FAFSA page and input any given school, and immediately get back a report detailing the number of federal and state aid applications for the school, the average aid amount awarded per student per year, the graduation rate of those who applied, and 5, 10, and 20 year rates of loan default or repayment deferral/deviation.

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  4. I’m not sure if positional good hits the mark here either. I see this in many different areas, where something becomes ‘special’ as a social construct and is distorted from the effect. It is distorted because if it were left purely to arise out of demand, then the market would supply more closely/efficiently on all three quality, cost and time to what society needed.

    University Prestige is a social construct. I think it artificially creates scarcity of what should be a relatively easy market solvable evolution to meet demand.

    Hopefully there is a accurate economic definition, I haven’t found it yet.

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    • University Prestige is a social construct. I think it artificially creates scarcity of what should be a relatively easy market solvable evolution to meet demand.

      Hopefully there is a accurate economic definition, I haven’t found it yet.

      “Positional Good”, seems to me, gets you 80% of where I think you want to go.

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        • Also just using cost disease ignores the quality and time distortions.

          I have a notion to starting calling this stuff SCQTCD.
          (Social Constructs Quality Time Cost Disease)

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          • A while back, we discussed the “Scarcity Premium” that allowed for stuff like “Scribe” to be an official position.

            In my own youth, I witnessed “computer literacy” have a scarcity premium (reading articles in Time about companies training employees to use a mouse with the solitaire game that came with Windows 95).

            And that was quickly followed by the scarcity premium that came with knowing HTML or how to use unix commands.

            I think that there might be another dynamic there as well…

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            • Hell, I used to have to act as a secretary for my father, taking dictation and typing out his letters using MS Word. These days he’s making his own financial-analysis spreadsheets.

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    • There are a lot of competing theories on what education does. The University of Amsterdam has a research department that is comparing how these different models fit different European countries. IIRC, Germany has more skills-building aspects, while the UK had more social-signaling aspects. Most likely any educational system blends aspects of different things.

      The positional-good aspect is not just explanatory of student behavior; it is also how employers are expected to react. The employer has a stack of resumes of recent graduates that don’t vary that much, and will probably put weight on the perceived educational ranking.

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    • Everything is a social construct because humans are social animals. We like being in each other’s presence and this allowed us to do tremendously amazing things like domestic animals, learn craftsmanship, and master the physical world. The down side is that we are status seeking animals and that is why going to Harvard is more prestigious than SUNY Albany. Its also why other positional goods and social hierarchy exist.

      A big problem with nearly every ideology on this planet is that they ignore the parts of human behavior that go against their ideology or power them and they will mystically and magically disappear. Than we can all live in varyingly defined utopias.

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      • Hey man, I can totally dig it. No problem. I just keep getting back to this crazy thing about capitalism.

        Not just capitalism, but like a base capitalism where people can prosper and stuff. However very little capitalism survives first layering of social constructs, then that is taken further in trying to create social constructs to fix ‘those’ social constructs until we are about three or ten layers deep in ‘fixes’ or gone full Hobbes on it.

        It’s kinda cool that other countries can limp around with first layer social constructs for awhile and still maintain levels of prosperity. I don’t know if it is because they don’t make this stuff as ‘special’ as we do here in the US or what.

        If we do this stuff in the US, we may need split markets so the ‘special’ stuff can be kept seperate from a more basic functioning market. That really has problems though, because the ‘special’ market would distort the regular functioning market.

        Any ideas?

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        • There are a lot of people on the left who like to say “reminder: money is nothing more than a social construct.”

          And this always makes me wonder about what is their point. Money is a social construct but a very useful one and it looks like the use of money was something humans developed early on because it is easier to prosper with a universal basis of exchange over determining whether Kate the Knitter can offer anything to Greta the Grocer or does she need to go to Mike the Mechanic first and do her barter.

          So money might be the most basic of social constructs and then everything builds out from it. A university education always marked someone as being a member of the elite in one way or another. Nothing is going to change this.

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          • There is actually a lot of debate on whether money developed as a more efficient way to trade goods than barter. This is mainly because there is no evidence that the theoretical pure barter economy existed anywhere in human history. You had things that came close but there was always something like money.

            The alternative argument is that before money was a thing you held in your hands, it was an abstract unit of value that measured debt rather than distance or weight. Under this theory, it was turned into a thing you can use to buy goods because Kings found it easier to give their soldiers and staff money and have them outfit their own households than trying to figure out which every underling needed. Markets are a state creation in this version of history.

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            • That’s a interesting view of history. As far as I have researched there where only two population centers (Sumer and Egypt) where debt could have been proven to exist prior to 3500 years ago. However plenty of surplus caches of tangible mobile goods are prominent throughout archaeology. Also specialization of small communities that contained significant amounts of artifacts not associated with the community specialization contradict the claim that barter type exchange wasn’t prevalent.

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          • Money IMO is really only useful if it is backed, and increases the velocity of exchange in base capital systems. Much beyond that and it turns from something useful to problematic.

            One of the few things that has saved the US from critical inflation events is the quantum of reserve currency distributed offshore. It would take a crazy amount of money printing to double or triple that amount. Now if or when that currency makes it back and the printing really takes off, who knows, but the actual value of the dollar continues it’s march toward zero.

            Before universities it was the scholar/teacher that you were studying with that somewhat made elite status. I often wonder how teachers would be doing if they could gain better profits directly from their work, instead of sharing it with a institution.

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  5. No analysis of college costs is worth the electrons used to create it unless it is measuring net costs. The difference is massive. Just compare the lines of net vs published for private and public schools.

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  6. An additional phenomenon is the credentialism one.

    Jobs that used to just require a high school diploma now require a college degree.

    And the jobs that used to just require a college degree now require either a college degree in something that has more than one or two weed-out courses, or a master’s degree, or a law school degree, or something like that.

    And, get this, employers for the jobs that used to be able to hire fresh out of college are now saying that the best way to get your foot in the door is to be an unpaid (!) intern for X months in a city with among the highest rents in the country.

    There’s probably some amount of Goodhart’s law at play and there’s probably some sexism/racism/somethingism at play but I *STILL* don’t understand how a market can be simultaneously flooded *AND* have a bottleneck of the type you’re talking about. We have no shortage of decent would-be professors, after all.

    “Accreditation” doesn’t get me there. Not for the former high school diploma jobs.

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      • Hrm. So this was a “pick two” situation where we said “well, if we snip here, cut corners here, add efficiency experts here, hire consultants here, add administrators here…” situation that turned into pretty much exactly what you’d expect?

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        • I’m not for sure what you mean there, but take a look for the moment at each leg of the triangle having an infinite spectrum that can be achieved. Lets limit it for a moment between one and a hundred. If social constructs start to limit the quality of a product, lets say in 1970s to have a minimum quality of 40. Then in 1980s have a minimum quality 70. then in 2016 have a minimum of 90.

          In the year 2017 you can only work in a 10% of the entire 100% range where in 1970, the market would offer 70%.

          What’s worse is that this doesn’t have to be created by guilds or even accreditation, social norms can get it there.

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          • Well, there’s also how “quality” is relative.

            Are you old enough to remember green text monitors that couldn’t really do graphics?

            If so, you watched 17″ CRT monitors evolve from the monitors that only the CEOs had to being monitors that you couldn’t give away.

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            • 1970s
              “According to section 5 of the Universal Order of Monitors that all monitors henceforth will be green monitors”

              1980s
              “According to section 6 of the Universal Order of Monitors that all monitors henceforth will be text monitors”

              1990s
              “According to section 7 of the Universal Order of Monitors that all monitors henceforth will only support Times New Roman”

              2017:
              “Hey dude, back in the alley we got a color LCD monitor for 2.5 million bucks”

              “wait, your saying they make color monitors? Your one of those conspiracy utopian nuts, aren’t you?”

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    • I’m betting if you map the change from diploma to degree to specialist degree on a time line alongside the changes in both companies willing to bear the cost of OJT and employee/employer loyalty to each other, you’ll see a lot of parallels.

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    • “An additional phenomenon is the credentialism one.

      Jobs that used to just require a high school diploma now require a college degree.”

      Well. The job doesn’t require a college degree. But these days there are so many people who have college degrees, and those degrees are so strongly tied to certain socioeconomic characteristics, that employers can afford to make “have a college degree” be a proxy for those socioeconomic characteristics in a way that would not be legal if done overtly.

      That is to say, it’s illegal to make racial preference be part of your candidate search, but restricting your search to degree-holders will inherently filter blacks, hispanics, and lower-class whites or asians out of your candidate pool.

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      • European nations bar discrimination based on whether someone is a degree holder or not in many situations. I once was at a party with a woman from the UK who was getting her degree later in life from California because she moved here with a spouse and discovered she could no longer get the same jobs because she lacked a degree and if she got the same job, her pay was lower.

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  7. Good essay Vikram. I think “positional goods” are a big explanation. A lot of colleges and universities took GWU’s lead and decided to compete for non-local students.

    My law school’s undergrad division is like this. They were known mainly as being a local, Catholic university that educated first-generation college students. Usually working-class kids whose parents were old San Francisco, Irish (and sometimes Italian but usually Irish) Catholics.

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  8. FWIW I think there are still colleges and universities that are commuter schools and generally try to educate first generation college students but these schools are often dealing with non-traditional students (meaning over the 18-22 age bracket) who need longer to graduate and might need different resources. They are often breaking down themselves in very real ways. The CUNY (City University of New York) system was and is primarily dedicated to being a college for first generation college students, usually the children of immigrants and/or the working class. The school is and was always underfunded and things are getting worse.

    https://www.nytimes.com/2016/05/29/nyregion/dreams-stall-as-cuny-citys-engine-of-mobility-sputters.html?_r=0

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    • In your first sentence you more or less described my uni, except we’re more rural, and we’re in a chronically economically depressed area. (And I HAVE seen students go on to “do better” than their parents’ generation did here, regardless of what may be happening in the outside world.)

      I don’t know. These kinds of articles bring up a lot of feelings for me that cloud my thinking process:

      1. I really enjoy teaching, especially the smaller-group, more collegial situation of labs. I THINK I am good at it, at least, I’ve never been criticized heavily and told I need to shape up.

      2. I like having tenure. I like not having to go before Bob and Bob every year to justify my existence. We have post-tenure review now, which is woeful enough (you can’t get fired without good cause but for someone like me who over-interprets everything,I read way more into the minor criticisms I received than I probably should. I actually had nightmares about it). I like not being able to be fired on the whim of some legislator who read an article saying “The future is Cells” and so thinks it’s time to let all the organismal people go, or something.

      3. Our relationship with our legislators is adversarial at best.

      4. Budget cuts and the related insecurity has damaged morale and some of the collegiality in my department. I saw a colleague go after someone in a way I would not have predicted five years ago.

      5. We’re not gettin’ rich. I made less money last year than I have made since about 2009 because of a summer pay cut and because of furlough days. I’m okay with that except when I get portrayed as a layabout by people not in academia.

      6. Administrative bloat is a thing, but some of it is necessary because of added mandates we must meet, and most professors are unprepared to deal with the flood of added paperwork

      7. The heavy pushing of student loans is probably not wise. We sometimes have a hard time finding enough work-study students, which baffles me, because the way I was raised, I would think “Pay as you go AND gain job experience? Best deal ever!” but it seems a lot of the students seem to be either hoping for a very well-paying job or some kind of future loan forgiveness.

      8. I remain skeptical about the idea of online education taking over everything, even as I fear losing my job to a computer. I find students whose only “lab” experience is online simulations are by and large terrible in a “real” lab (don’t know what glassware is, or how to use it, or know any basic safety protocols).

      9. I would never, these days, counsel a promising student to go into college teaching. Even as much as I love teaching itself, even as much as I enjoy working with (some) research students. In the less than 20 years I’ve been in this gig, things have changed so much and mostly not for the best – there is much more paperwork we have to do, far more hand-holding is expected, you’re expected to justify why every time a student earns an F in your class….

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      • 6. Administrative bloat is a thing, but some of it is necessary because of added mandates we must meet, and most professors are unprepared to deal with the flood of added paperwork

        Can you go into more detail about this?

        I’m curious, because I lived through an era when engineers and researchers in private industry were required to carry a much heavier load of administrative work. All the engineers had to become typists; all of them had to become draftsmen; all of them had to become travel booking agents; all of them had to become entry clerks for much more detailed data the company was required to collect. No one ever said, “I know — we’ll hire more administrative staff.” In fact, much of the added load on the engineers happened because administrative staff was laid off left and right. And it goes without saying that the technical work load wasn’t reduced.

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        • Giving exams/providing note takers/other accommodations for students with IEPs, and making sure those are “fair” and fit the letter of the law, for one thing. All the Title IX reporting. Managing scholarships. Managing grant funds at some universities (we don’t have a Grants Administrator). Keeping tabs on financial aid stuff to make sure no one is double-dipping and to make sure people are making progress toward a degree – I am in on some of that, but I have no authority, only responsibility, there.

          I think if I thought of it more I’d come up with more stuff. It does seem every year we are expected to be accountable to more things and if I had to do ALL of it myself I might as well just move a cot into my office ‘cos I’d be living here 24/7.

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          • And it’s easy to say “but you should have been doing that stuff already!” but:

            A: There’s still a cost associated with that work, even if it should have been getting paid all along, and

            B: Whether they should, the fact of the matter is that most weren’t.

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            • the thing is, if “they” expect excellence in teaching, research, and committeework, “they” cannot also concomitantly expect us to keep up with all the legal paperwork AND willingly work for about $60K a year before taxes.

              I do think there have been some new mandates in recent years. I am now, for example,a ‘required reporter’ – if a student comes to me and reveals they are in an abusive relationship, I have no choice but to report it to the police even if the student begs me not to. If I do not I am violating the law. (I am permitted to stop someone about to reveal something that I am required to report it).

              I also have had to go through: needle-stick avoidance training, ergonomic awareness training, Active-shooter training (luckily, not the really traumatizing one with a simulation that the chair of my department had to do), sexual-harrassment-awareness training on a yearly basis….

              No one thing is so very big but put them all together and it’s being slowly pecked to death by ducks. I still love teaching but I twitch every time there’s an e-mail from HR telling us about new training or new paperwork.

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            • I can’t tell if it’s a LOT different, or if the difference is between the “public Ivy” (University of Michigan) I attended, and a school very aimed at helping “first generation” college students cope (where I teach now).

              I look at the stuff done for students here (exam week stress relievers, a big, big welcome-week, lots of awards ceremonies) and try hard not to feel bitter that it felt like no one cared whether I sank or swam when I was at university. (Well, I cared, and my parents cared, but beyond that….no. I even had a hard time finding someone to advise me into classes).

              I think things HAVE changed and there is a more “consumerist” mentality. I know colleges that have built all kinds of fancy “country club” amenities for their students to attract them (not my campus), and no one talks about how new dorms that have suites nicer than any apartment I ever lived in, or fancy workout facilities for the student body, or “free” cable and internet on campus add to the cost of college: students and parents expect it but it does cost something and the cost gets passed along.

              I had a cube fridge and an immersion heater and for part of the time I was there, a tiny b&w tv that would pick up the Detroit over-the-air stations if I turned it just right….

              (And yes, I walked uphill both ways in the snow to get to class.)

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              • I don’t think anyone is ignoring the issue of luxury dorms and such. There are a lot of articles on how semi-elite universities use the luxury amenities to compete for well-to-do students even if this raises tuition.

                I attended college just before the luxury college boom. The truth is that if you are an elite university with a brand name, it is possible to have Spartan amenities and attract top students (wealth and grades). If you are a less well-known university, you need something to compete on.

                The big issue is that perhaps a lot of colleges and universities should close down but the institutions are going to fight for their existence because what else would the staff and faculty do?

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                • And that last sentence is my big worry. I own a house here (probably could not afford to elsewhere), I’ve kind of made a life for myself here, and the thought of having to pull up stakes – if I could even FIND another job, at nearly 50 – and move somewhere else makes me despair.

                  I don’t know. I suppose I could learn to deal blackjack and work at the Indian casino. (I’m probably too fat and old to be a cocktail waitress at this point).

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        • As as engineer that was thrown headon (without prior training) on the deep end of the finance and administrative side of the business I can tell you that, as many administrative functions were transferred to engineers and commercial people, the accounting and compliance functions ballooned after Sarbanes Oxley, and continue growing. Even though better and better software actually does the accounting, compliance rules multiply the check points, so that every transaction requires several different people to enter, approve (post) and file. With different people approving different elements of the transaction and approving the different steps of the accounting of the transaction.

          Tl/dr. Most of your administrative savings have been eaten by your accounting and compliance functions.

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        • That is one variant of admin. Another variant is the Office of Financial Aid. The Office of Communications, the Office of Development, the Office of Alumni Giving, etc. Offices to investigate Title VII and other complaints, etc.

          A lot of my friends work for UCSF in grant/contract administration as far as I can tell there are dozens, maybe hundreds of people doing grant and contract administration and writing at UCSF. Now UCSF is a medical research powerhouse but my understanding is that grant writing used to be done by the academics themselves and now many universities have specialized departments for grant writing and management.

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          • We don’t have that kind of grants support – we write ’em ourselves and largely administer ’em ourselves.

            Which is why I’m not going to apply for a large external grant unless I am told my continued employment hinges on it.

            (The research I do is very small-ball and cheap: it’s mostly my time, and you can’t write grants for supplemental pay to make up for giving up your afternoons and weekends.)

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          • The only times I’ve been involved in writing applications for research grants, the cost of administering them was built into the grant amount (eg, 10% for admin). If the Dept of Grant-Writing is not self-supporting in some fashion like that, then it’s a gift to the faculty. That’s okay, and I’m sure a Dept of Grant-Writing funded not from the grants themselves is an attractive perk for hiring researchers, but the money has to come from somewhere.

            My undergraduate school is peculiar in that the Dept of Alumni Giving is a separately incorporated non-profit not under the control of the university administration (or the legislature, always a consideration at a state school). The Board of Directors there has always been rather adamant about keeping costs down.

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    • For the benefit of the foriegner, what’s the deal with this commuter vs not commuter school distinction and why does their seem to be an implied prestiege benefit to not being a commuter school?

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      • In general, the better the school the higher odds that it has a residency requirement (but I couldn’t comment on the historical reasons for that). There’s also a bias (at least in my mind) towards being part of a college commmunity vs. having a non-college life/job/whatever that you leave just to drop in on classes in the sense that you’re there (in part) to make friends and form connections.

        So I would say there’s a very strong correlation, leading to implied causation, and a non-zero actual causation.

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        • So it sounds like one of those things where people new to the system end up buying the old upper class, upper-middle class activity of going away from home for school.

          This all sound very odd coming from a public university system. Going away for school is what you do for particular elite program or because your from a rural area or if you just have so much family money you can do whatever you want. The idea you have to live on campus first year sounds particularly nutso.

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          • Depending on where you are from, the U.S. might map as mostly rural. During the Civil War, Congress allowed states to sell certain federal lands to create public universities, the purpose of which Lincoln described as dissimulation of agricultural technology. Many of the colleges initiated under this program originally had the word “Agricultural” in their name. States got to choose where to locate these universities, and it seems like they rarely selected the most densely populated area. Instead, it looks like they picked areas nearer to agriculture, or in the center of the state, or where cheap land was available, or as a result of some political compromise. In short, the largest and oldest public universities are often located in college towns that are not necessarily close to where people live.

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            • Land Grant schools might also have the words “Mechanical” and or “Technical” in the name as well. Though some schools have changed names since they were founded.

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        • I suspect it traces back to the origins of universities during the Middle Ages. The first universities were associations of scholars and students living and studying together. This maintained the norm for centuries. Colleges and universities that had commuting students didn’t appear until the 19th and 20th century.

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      • A commuter school is simply one with zero or few dorms and an overwhelming majority of students are from the immediate area and probably still live at home.

        Most elite universities and a lot of not so elite universities require students to live on campus for the first year at least but I suppose there can be a hardship or circumstances waiver. We did have non-traditional (read middle-aged) students when I was at Vassar and they did not live in the dorms with 18-22 year olds. Most of them had families.

        I think that there is an idea in the United States where college is a place you get to be a mini-independent adult and this is not possible if you are staying at home. Plus there is a prestige if a school attracts students from all over the United States/Globe instead of just from the local 50 miles.

        CUNY and its alumni used to call CUNY “Harvard on the Hudson” and claim that they were offering a Harvard level of education at low prices to first-generation college students who were often poor and living at home and taking the subway to school. The question is how much is this true and how much is puffery. There were some famous alumni of City College especially in the 1930s with graduates like the literary critic Irving Howe, Sociologists Daniel Bell and Nathan Glazer, and eventual neocon Irving Kristol. But even back then, CUNY suffered from underfunding, falling apart infrastructure, etc. So what extent is “Harvard on the Hudson” fooling themselves? Harvard is Harvard. Columbia is Columbia. Now someone like Howe was excluded from Harvard by poverty and Jewishness (this was the era of the quota system).

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  9. Very interesting post Vikram…

    I’ve been thinking about this subject a lot lately because my youngest daughter is currently in the college-prep phase as a high school senior. She’s going to be attending a local regional campus of a big state school. Tuition is going to be less than $7000 per school year (Fall and Spring). Add on a small Pell grant and work study and that price now becomes $3500 per school year. That’s right, she gets her degree for about $14,000. And this isn’t settling. We love the school and it’s a great fit for her.

    In the Louisville area, with about 25% of adults holding a college degree, there are few to no industries that really care where you went to school. A BA from Regional U will get you in most doors. So my question is, how is this dynamic different in cities with a higher rate of college graduates?

    Laura over at Apt11D has been writing about her son getting ready to attend Rutgers, which is something like $30,000/year if he lives on campus. When questioned by a reader as to why she was spending so much, Laua replied:

    I like a number of small, regional state colleges. The College of New Jersey, for example, is harder to get into than Rutgers. But nobody has ever heard of it outside of New Jersey, which might make it difficult if he wants to look for a job in LA or Austin.

    So I guess maybe the name on the degree does matter in some cities. The next question is, why not move to a smaller town, with less debt, where no one cares about the name on your diploma, and get your life started?

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    • That seems like a pretty reasonable strategy in retrospect and once you’re established somewhere. It may not seem so attractive when you’re eighteen years old and still not quite sure what you’re going to do with your life and not quite sure if that small-town existence is going to be right for you because wow life in the Big City On The Other Coast sure looks like a lot of fun so maybe that’s something you want to leave yourself able to try out for a while.

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      • Serious question: Is it really necessary to have the Big Name degrees in those places? I’m living in a medium-sized city and my degree from State U was never scoffed at. If that’s truly the case in the bigger cities, does the Big Name degree act as a filter, or is it just a cultural thing?

        I also wonder, ancillary to this, how the community college system plays into the issue. I’ve always heard that community colleges on the West Coast were kind of a joke, whereas in the east, it’s a legitimate option for the first 2 years (and one I am proudly a product of).

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        • For a prestigious law firm, yes, it’s pretty much necessary. Not so much because the lawyer who graduates from Prestigious Law School is necessarily a better lawyer than the one who graduated from Middle Tier Law School, but because the clients are thought likely to freak out about the credentials of the junior lawyers assigned to their matter if anything goes wrong. The partner who wrangles that client can easily say, “But, I put the kid who graduated top of her class at Stanford on this.” It avoids risk.

          As for the community college system out west, I vouch for it, at least here in California. We have good community colleges, and they’re viable feeders into our also-good four-year institutions. Obviously, the student gets out of the school what they put into it, and yes, there are plenty of students who don’t put in the work. But they also tend to be the ones who neither earn Associate’s Degrees nor transfer to four-year schools to do their higher-level work within their majors. To hear tell it, it’s the same story in Colorado and I totally believe it.

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          • Well, there’s also the Colorado Paradox — a real thing in the education literature. We don’t spend a lot on our public schools. We do a pretty average job of getting our kids through high school and college. Our higher ed spending is badly distorted by the contortions we’ve done to get around TABOR. Yet, we have the third most educated workforce of any state in the country. At least at the flagship schools, we get remarkably good faculty for what we do spend. And the CCs benefit from a batch of retired science/engineering types who will volunteer to take below minimum wage to teach.

            Front Range and mountain lifestyles buy a lot. One of the standard jokes is that your waitperson at a high-end Vail or Aspen restaurant probably has a better degree than you do.

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            • I would take below minimum wage to teach (given I had a pension), but I wouldn’t take below minimum wage for all the people-wrangling/managing other people’s emotions that my job seems to entail at the moment.

              There’s a very old and very common joke among professors:

              “I teach for free. They are paying me to grade.”

              I amend that to:

              “I teach AND grade for free. They are paying me to deal with other people on a daily basis.”

              90% of my students are fine and lovely people who manage well on their own. Of the remaining 10%, half have big problems but they tend to be ones I can help ameliorate with a little work on my part. It’s that remaining half you have to worry about….

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      • still not quite sure what you’re going to do with your life

        This, I think, is missed too often in these discussions. I certainly didn’t know what I wanted to do, so looking retroactively and saying that another school would have provided an equally-good path to where I landed for less doesn’t really tell me anything. Likewise, saying a school has a really good program X isn’t going to help unless you’re the rare seventeen year old who knows with 100% certainty they want X to be their life.

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        • Added to what says here, most kids who do know what they want to do when they get out of college discover once they are out that they actually don’t want to do that at all.

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          • @nevermoor

            I knew three things as a high school senior:

            1. I wanted to study theatre;

            2. I did not want a conservatory program.

            3. I’d be lost in a big school where most classes were hundred plus person lectures.

            So this meant I applied to a lot of SLAC’s and my alma mater was great because it had a well-respected theatre department, was not a conservatory program, and there were not many big lectures.

            One of the interesting things at law school was that a lot of my classmates found the SLAC and then grad school to be scary because of how few students were in those classes. They saw the big lectures as features, not bugs.

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  10. I don’t know all the fancy economic words but isn’t the proliferation of student loans a huge issue? If everyone and their mom is walking around with a bag of money earmarked for college, how can that do anything but drive prices up?

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    • That’s the Incidence of Subsidy – when you subsidise something, some of the gain goes to consumers and some to producers (and all those who produce the inputs the good requires).

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  11. Interesting post.

    One caution about using George Washington as a case study. DC’s public university is probably the worse ‘flagship’ ‘state’ university in the US. There’s two other major public universities in the DC area (UMD, which has always been good, and GMU, which went on an almost identical trajectory of upjumped commuter school described here). But, naturally, you have to be a resident of the particular state in order to get in state tuition (though there is a program that the DC government uses to provide grants so DC residents can effectively get ‘in state’ tuition at colleges outside the DC boundary)

    In any case, there’s no real ‘public option’ to help GWU keep it real. Plus, the GWU transformation is emblematic of the transformation of the DC area from a middle class/working class area (in the average, and with significant racial variation) in the 70s & 80s to one of the richest metro areas in the world (but again, with significant racial variation) in the present day.

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    • There are lots of public option in New York City like CUNY and many different nearby SUNY campuses. That hasn’t helped NYU, an almost near identical analogy to GWU in DC, keep it real.

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      • yes, UDC, the Mess at Van Ness. (Tho supposedly it’s gotten a bit better recently)

        fair enough, but I myself was looking at colleges at the beginning of the time frame we’re talking about (late 80s early 90s) and I remember NYU being on the expensive side back then – and not as good as Columbia.

        Which I think is another facet of this. The premiere school in NYC is literally Ivy League. You’re never going to compete in prestige with that. The premiere school in DC was Georgetown, which was one prestige tier lower than the Ivy’s – so it was more feasible for GWU to try to get into a tete a tete prestige game.

        (Though the control group for this is American, and that’s still hella expensive, so who knows)

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        • Georgetown not might be Ivy league but only on a technical level. Its like saying that Stanford isn’t Ivy league. GWU and NYU were both trying to be the school for people who wanted to study in DC or NYC but couldn’t make into Georgetown or Columbia and commuting schools. They decided to compete on the latter. GWU also has American University to compete with and nearby schools in Maryland and Virginia.

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  12. OK, if no one else is going to point it out, I will. Nearly all of the red items are in some part subsidized and/or paid for by the government. I’m not saying that the government payments have caused the inflation completely, but it’s got to be a part of it. Textbooks are the exception, but they’re expensive for the same reason: the buyer has no choice but to pay for them.

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  13. I enjoyed this post and agreed with most of it. Where I get stuck is it seems like we’re saying that some schools are objectively better than others, which seems to be true. Then we’re also saying that increasing the cost increases the prestige, which also seems to be true. But the reality seems to be all over the place.

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    • Reality is messy that way. Some universities are prestigious because they are old and have built up a reputation for prestige over the centuries because of being finishing schools for the elite and centers of academic excellence. During the 1980s, several semi-elite universities noticed this and increased costs to increase their prestige. It worked for them because they were already attracting students with really good grades already just less good than the elite schools. Eventually non-elite universities attempted the same thing but got into the game to late and weren’t attracting students close but not quite at Ivy level to begin with.

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  14. Why don’t colleges attract students on price? To some extent, they do.

    This has been my experience. When I took my younger son to state schools not named University of Oregon last year, this was the number one thing pitched by the school presidents: “No, we’re not a big name like Oregon, but we cost far less. If you want, come tryout out for a couple of years, and if you still want to graduate a Duck, transfer your credits, and save tens of thousands of dollars.”

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    • This is a whole line-of-business for the community colleges in Colorado. Some years back — guess it’s been a couple of decades now — the legislature passed laws requiring (a) the state four-year schools to accept credit for a whole list of classes taught at the CCs (eg Calc I, II, and III), and (b) the CCs to teach those classes to the same level as the four-year schools. The CCs upped their game, or at least the four-year schools have never been able to show a difference in outcomes, and now there’s a whole batch of students who get accepted at one of the four-year schools and defer while they live at home and pay cheap CC tuition for a bunch of the “block” sorts of classes.

      My impression is that at least the math departments at the four-year schools view it as a good deal just because they’ve been able to stop teaching remedial math. Instead they send you to the CC for that sort of stuff.

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          • it’s easier in that there are far less competitors than traditional first year freshman pools. also the early decision/early action pressures don’t exist, so you don’t have early funnel closures that way.

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          • Under the assumption that the community colleges are teaching to the same standards as the four-year schools, two years of A’s in college classes probably counts for more than test scores and high-school grades. Part of that would be that it demonstrates you can deal with the pace. My rule-of-thumb has always been that college classes move at about twice the speed as high school.

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            • Under the assumption that the community colleges are teaching to the same standards as the four-year schools

              :)

              that sound you hear is a bunch of 4 year professors screaming their faces off, btw.

              one of the bigger issues at some schools – and only some – is that there is a fair amount of resistance on the faculty side to dealing with transfer students. tends to pool in the top 50-ish range, and isn’t universal by any means, but common enough not to be notable.

              slacs, on the other hand, tend to love transfers for the reasons detailed above. plus if you’re a residential school, they’re (generally) less likely to be drinking drano for recreation, pissing in the neighbors’ flowerboxes, and sexually assaulting each other.

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            • I loved my time at the University of California (both for undergrad and grad school), but it is likely both my daughters will attend a CC for the first few years of their education. I recognize that their first years of college may not be the same quality I received, but I am hoping it will at least be worth the time. Santa Rosa JC (the local community college in Sonoma) has a pretty good reputation for feeding the UCs, so I am hopeful.

              Having said that my girls are about 16 years from graduating high school so who knows what public university education is even going to look like by then.

              I think there is something to be said of simply waiting until you are a bit older before taking on the financial debt education will produce, which is another reason I am a proponent of CC (even if I never attended one). I was simply a better student when I was 21 than I was when I was 18 for a multitude of reasons. I have always liked the role the Israeli military plays for Israeli society: you have all your young adults go off and do something worthwhile for the good of the state while giving them a controlled environment away from home. It’s paternalistic, but the older I get, the more I think that type of guidance is good for a society.

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              • “Having said that my girls are about 16 years from graduating high school so who knows what public university education is even going to look like by then.”

                My boys are a bit older but I’m pretty much banking on the system being dramatically different.

                We’re saving but such a pittance it’d mean nothing if today’s trends continue.

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    • That’s how I went to UW-Madison. I had to, because I could not come in as a Freshman, since I had a few college credits.

      No one gives a crap that I started at MATC, only that the sheepskin says Madison.

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      • Depends on the son. Our older boy wanted to go to Oregon, and only Oregon; he never really looked at any other school. And he wanted to go to Oregon for entirely social/culture/lifestyle reasons.

        Our younger boy is more academically goal oriented than his older brother, and he graduates this year. He will have more opportunities to get into different colleges, partially because of his grades but also because he has a bevy of extra-curricular activities and leadership stuff on his transcript. However, at the moment he seems to be leaning toward moving to Bend, Eugene, or Ashland and attending community college. In Oregon, community college is free for residents his age, and he is thinking he wants to get his first two years of credits free, and reduce his long-term debt.

        His mom and I actually kind of want him to go the more tradition route, even though it would (obviously) be a hell of a lot more expensive for us. I have trouble sorting out how much of my own reaction is my own possible class prejudices, and how much is a realistic reading of the difference between what you learn in Psych 101 at a CC rather than a university.

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        • Thanks. But what I was trying (and failing) to get at was who do you think that argument was aimed at? How many 18-year-olds are thinking about things like long-term debt? How many of their parents are? Applicants see gyms and dorms and amenities; parents see bills. How do we help teenagers appreciate bills with six figures when many have never had more than 3 or 4 figure amounts to manage?

          Some of this is financial literacy but I also don’t think most teenagers have sufficient executive functioning skills to make decisions based on consequences years — if not decades — down the line.

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          • But what I was trying (and failing) to get at was who do you think that argument was aimed at? How many 18-year-olds are thinking about things like long-term debt? How many of their parents are?

            Lots, actually. Almost all of my sons’ friends fall into one of two categories: kids whose parents have already stated they are going to pick up the entire tab, and kids who know they will be required to have some skin in the game.

            The former group doesn’t seem aware of the cost of where they are considering going is likely to be, but the latter group talks about it a lot. Which makes sense when you think about it.

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          • “How many 18-year-old’s are thinking about things like long-term debt? How many of their parents are?”

            Actually, quite a lot, . When my son was looking at colleges 4-5 years ago, we had to sit him down and do the cost/benefit analysis. Various groups were going to help him, but as his father I wanted to make sure that he bore some of the cost himself. He was accepted to many SLAC’s, but, as the son of a professor, I wanted him to really look at what he was getting himself into. He ended up going to a very well regarded California school, as he is a resident, but will have a much lower debt load when he gets out, allowing him to do much more and have better options. That school also had a strong focus in interests of his and allowed him to put into practice what he was learning immediately.

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            • @aaron-david

              Interesting. I wonder how much of that is a relatively recent development in response to rapidly escalating costs and how much is more of a “class” issue. We were decidedly middle class (4 kids; mom teacher, dad firefighter, stepdad professor but with 3 kids of his own). BUT grandma left money for education. So cost wasn’t an issue. I know of one friend who turned down NYU for Rutgers (15 years ago) cuz the latter was free but not sure how much of that was him and how much parents.

              If more young people are making more informed decisions about how college is funded, that is a fantastic development. My boys are still very young but even now I’m trying to install some very basic financial literacy, particularly recognizing money as a finite resource.

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              • Interesting. I wonder how much of that is a relatively recent development in response to rapidly escalating costs and how much is more of a “class” issue.

                I think it’s a mixture of both — or to be more precise, it’s a mixture of cost and self-identity, which often has a strong class component.

                I certainly didn’t care that my school was comparatively up there in cost when I went to college, but back then school was relatively inexpensive. I could work part time and put myself through school without taking out any loans. If I had taken the loans rather than worked, my debt would have been quite manageable, even with a low paying job after graduation.

                But there’s also the issue of self-identity, which for some people revolves heavily around where you go to school, and more importantly how much status you believe you will have by having others know that you went there. As I have been trying (quite unsuccessfully) to point out in the thread above, most people don’t fall into this category. Most people couldn’t tell you where their college or university falls in last year’s USN&WR rankings. Sometime in the next number of years they will apply for a new job or a promotion, and the odds are that whoever is in charge of deciding whether to give them that new position won’t know or care either. But those people who do care? They will always be willing to sacrifice a lot for that prestige — money, debt, free time, relationships, etc. — because who among us doesn’t sacrifice a lot for their own self-identity?

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                • That makes sense. And I venture to guess there isn’t a ton of overlap — at least in terms of social groupings — between those two groups which may explain why others are having a hard time accepting the other group exists.

                  I look at a decent amount of resumes and quickly realized that I knew jack-squat about almost every undergrad on them and much of what I did know was unreliable (i.e., vague gut-level impressions of the school’s reputation as a whole). I had a slightly better sense of certain grad schools but it was still pretty limited. Where someone went to school was never a determining factor in advancing their resume and only impacted the hiring process insofar as what they actually made of that experience.

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            • Same here. When my kids got to the college application phase of their educations I had a long talk about cost, benefit, long term goals, short term pleasures, etc and so on with them. In our case, I told them both that we couldn’t afford to pay for them to go to an expensive outa state school, and that in fact, our help would actually be pretty minimal*. A conversation which I remember as one lengthy, causal conversation they’d probably remember more probably viewed by them as badgering. Nevertheless!

              Our kids (with a bit of help from us) made some good decisions with debt-load firmly in mind. Our daughter applied for every scholarship she could find while attending CU for 4 years, while our son went to community college for the equivalent of two years until he transferred to CSU. Each of them did absorb some, tho, and even at those low levels ($6000 and $9000 respectively) paying it off constituted a huge burden and imposed lots of stress. I can’t imagine what a kid would feel like graduating with an $80,000 debt load when their earning power just all that great.

              And both graduated from very respectable state schools, as well: CU-Boulder and CSU, which carry a lot of weight here in CO**.

              *We’d already paid for their K-12 private schoolin and were seriously in arrears furthering our own financial needs and goals.

              ** They both live in New Zealand now.

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        • Go with your gut.

          It isn’t about differences in classes, its about two years living in a community of smart, driven young people figuring out how to be an adult. Community college is a great resource, but it doesn’t sound like one your son particularly needs.

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          • Go with your gut.

            Well, it’s more a matter of my kid going with his. And I doubt I’ll push him to hard in one direction or another. He’s a really, really driven and goal oriented kid, and regardless of what path he chooses next fall I’m not worried that he won’t get to where he wants to be.

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        • “I have trouble sorting out how much of my own reaction is my own possible class prejudices, and how much is a realistic reading of the difference between what you learn in Psych 101 at a CC rather than a university.”

          I go through this with my wife a lot when we discuss education. She was born and raised in a working-class immigrant family; I am from a white middle class one. She thinks I am too picky about how the local public schools are run and that I disparage the Cal State college system too often. I imagine part of my opinion comes out of my class consciousness, but I also like to think I know more about these education systems and simply want my kids to get the best bang for their buck.

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          • “…I also like to think I know more about these education systems and simply want my kids to get the best bang for their buck.”

            If I may ask, how old are you? I have a working theory on people of my generation (I’m 33) and what we like to think we know, especially about education.

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  15. Okay, I’m going to play devil’s advocate a little bit here and ask: If the result of thinking of academia as a “market” (which let’s be honest is pretty much the idiot’s way of looking at everything now) has been to push up the cost greatly without really improving education in any noticeable way (and probably the reverse given what’s happened to grade inflation, well, inflation), why should we persist in thinking of academia as a market?

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    • Can you clarify what you mean by treating academia as a market? Higher education is certainly treated as a consumer product by many people but not entirely. To a certain extent, the elite universities always treated themselves as something of a consumer product for the very rich even if they never advertised themselves as such. When the Ivys and Seven Sisters more or less embraced their role as the place the children of the privileged spent the years between 18 and 21, they were a consumer product or market. You could argue that treating academia as a market is a natural progress of past trends in higher education.

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      • When we talk about universities competing with each other for students, we’re both looking at it as a consumer product in the market and looking at it as something else… I think the something else is what universities do best and when they lose sight of that is when they start comparing themselves to vodkas and thinking that pushing up the cost of tuition will translate to higher prestige. I’m biased because my undergraduate university was high prestige and fairly cheap, but they were considered old school.

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        • Thinking of academia or anything else as not a market is very old school. America has a lot of people that simply will do all sorts of mental gymnastics to think of everything in market terms and avoid any leftist thought even when its proved that strict market thinking doesn’t work or has perverse results. There are still Americans who believe that we can make market forces work in healthcare despite all evidence to the contrary.

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    • why should we persist in thinking of academia as a market?

      You’re joking, right? Every academic university in the country is either government-run or non-profit, and subsidized out the wazoo, both directly and via student grants and loans. It’s vaguely market-like in the sense that students have some choice over which universities they attend and pay tuition, but it’s one of the most un-marketlike markets we have.

      We do have an education system that’s 100% socialist: The public primary and secondary education system. How’s that working out? My understanding is that the US university system is generally regarded as one of the best in the world, if not the very best. How’s our public primary and secondary education system doing?

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      • My understanding is that the US university system is generally regarded as one of the best in the world, if not the very best. How’s our public primary and secondary education system doing?

        Presumably, since the vast preponderance of people in the US university system come from the US primary and secondary system, the answer to your question is tied pretty directly to the sentence that precedes it.

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            • See, for example, the methodology of the Times Higher Education rankings, which puts just under 150 US universities in the global top 200. here. It’s based mostly on research output and quality and on perceived teaching quality.

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              • Anyway, my point is that if you ask a bunch of academics from around the world which country has the best university system, the majority will probably say the US. Certainly a plurality. How many people would say that the US has the world’s best primary or secondary education system?

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              • I basically agree with Brandon here, at least roughly. From my post on stuck-with-tenure linked to in the OP:

                …the way to improving a university’s standing is for it to be choosy, not simply to fill a class schedule. I have no idea whether John Cochrane is actually a good in-class teacher. But my respect for the University of Chicago derives from people like him and Richard Thaler. They are at UC, and they do awesome research.

                If these people moved to the University of Iowa, some measure of my respect would move along with them. Eventually, those changes would filter down to the students to the detriment of Chicago students and the betterment of Iowa students. Without its most research productive faculty, a university’s reputation will eventually decay. Research matters to the reputation of the school even as it fails to matter directly to students.

                I’m not saying this is a good state of affairs. It just is the state of affairs. Research makes reputations in the long run, and the best research schools tend to be in the United States. There have been attempts to create great research institutions outside of the US, and it has happened, but US schools are going to have a built-in advantage since there are good PhD programs in the US, and the programs will tend to be good because the faculty are good, which tends to attract the best students, which makes the programs better and the faculty happier, which makes it easier to recruit and….

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                • There may be exceptions to this, but I don’t know how many. What schools out there have good reputations but have no research footprint? Perhaps some fancy liberal arts schools? Brandeis and Swarthmore sorts of places? But maybe they do lots of good research there and I just don’t know it since they don’t operate in my field.

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                  • Vikram Bath:
                    There may be exceptions to this, but I don’t know how many. What schools out there have good reputations but have no research footprint? Perhaps some fancy liberal arts schools? Brandeis and Swarthmore sorts of places? But maybe they do lots of good research there and I just don’t know it since they don’t operate in my field.

                    by research i am presuming you mean stem, etc – in which case, most of the top 100 lib arts colleges. and most of the others who aren’t in the top 100 as well.

                    doesn’t mean they don’t have bio/chem/engineering/phys/cs etc researchers working, but it’s not their main selling point outside of kids who are interested in those fields (and the opportunity to work on research directly with said researchers).

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                    • Liberal arts folks do publish stuff, don’t they? They have peer review and ways of establishing reputations through it. At least that is my understanding.

                      Outside of STEM the other sciences definitely do what they consider research. Sociologists and anthropologists have their own journals they publish in. I’m coming from the business school, and we play dress up and pretend to be doing science and research

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                      • Vikram,
                        I know physicists who got their work in the intro business classes.
                        “Fire your worst customers” and all that. Empirical research shows that it helps them stay more competitive than new entrants into the field.

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                      • When I was at UT-Austin in the 1970s, the operations research group was a joint undertaking of the engineering and business schools, with both types of students in the graduate classes. Absolutely nothing “pretend” about the work the business faculty in the group were doing. In fact, the business school had bigger names in theoretical work than the engineering school did.

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      • “How’s our public primary and secondary education system doing?”

        Actually, pretty good actually, once you account for the endemic child poverty in this nation compared to other OECD nations.

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  16. Does this reflect the actual cost of education, or just the tuition sticker price? Private colleges in particular often engage in heavy price discrimination, making sticker prices unrepresentative of either the actual cost of providing education or what students actually pay. A better metric might be average total public and private expenditures on higher education per student.

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  17. Tod Kelly: I think quality-of-education is completely divorced from price

    i want to pay a lot of money to watch you guys tell this to a bunch of adjuncts.

    hahahahahahahah

    hahahah
    hah
    ha

    ahhhhhh. sigh.

    no seriously though you are not entirely incorrect, but also not entirely correct. you’re somewhat in the middle. mid-rrect. that sounds bad. labs matter, as does talent. particularly if said school is in the middle of nowhere.

    anyway, the magic term you should all google is “discount rate” because mang i tells ya there is a lot more going on the sticker price is not the actual price by a wide margin – for parents (mostly friends) i know who ask me about it, i tell them you can presume at any private college* outside of the top 50 or so that you can push for a package that’s about 60% of the total tuition price from fin aid and at least 2/3rds will play ball. perhaps even more. you lose nothing by being a nudge in this case.

    and if they want to be completely a jerk, get an offer from a similar college (preferably one that cross-apps, but that’s hard to determine from the outside) and play them against each other like car salespersons.

    * this excludes schools that don’t gap students, obvs.

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  18. One interesting display of how difference prestige schools make is in terms of CEO education. Tillerson went to Texas A&M in engineering for example. John Watson of Chevron went to UC Davis and Univ of Chicago Business school. Darren Woods of Exxon also went to Texas A&M (shows difference of rankings in Engineering than other Schools.) Essentially the examples suggest a more local focus. Just liike when I went to work in the research lab of a major oil company most of the folks were from Texas schools. (I was suprised how few big 10 folks there were, but then the big 10 was not big on Petroleum Engineering)
    IBM’s Ceo went to Northwestern. Intels is from San Jose State. Being the CEO of a top company is a lucrative career path, but more this points out in different fields and different regions. different universities are regarded as top

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  19. One other thought is that if you have a career plan that involved graduate school or an MBA or the like the undergraduate school is not as important long term than where you got your terminal degree. If the undergraduate school is good enough to get one into the terminal school (which most top tier state schools are) that is enough. Also at least 45+ years ago at a big 10 school the faculty would hold office hours and most students did not come that often. Also in a large school getting involved in discipline clubs that held lectures by faculty that would talk about their research (which faculty members love to do) was a way to interact with faculty.

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    • Certainly this used to be true. When I was planning college, I knew it was going to be math plus “something else technical”. Since I wasn’t sure what the “something else” would be, that just meant I needed to pick a big school where there were lots of different “something elses” available. I got accepted at several places — I was close to choosing Michigan when my state university waved a piece of paper that said “four years tuition and fees” at me. When it came time to apply for graduate school, having gotten a BS at Nebraska instead of Michigan didn’t seem to make any difference in how much consideration I got. While I bailed short of a Ph.D., in technical fields it’s not so much the school as it is your supervising professor. The name prof who would have been my supervisor had a slot lined up for me, but I just got so tired of being poor.

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  20. Vikram Bath:
    Liberal arts folks do publish stuff, don’t they? They have peer review and ways of establishing reputations through it. At least that is my understanding.

    Outside of STEM the other sciences definitely do what they consider research. Sociologists and anthropologists have their own journals they publish in. I’m coming from the business school, and we play dress up and pretend to be doing science and research

    yeah, everyone does research of some kind. approaches in the humanities vary, e.g. my wife does a lot of original source and archival work, which is fairly rare in literature (and, until recently, was looked down upon due to a heavier weighting theory-centric approaches, intra-discipline) but far less rare in, say, history.

    but i feel very confident in saying this research has absolutely nothing to do with overall institutional perception outside of those whose published books/media appearances transcend their disciplines. And i am speaking of reputation as understood by non-academics e.g. the white whale of us news rankings, and the more informal, harder to measure peer-to-peer communications within parent groups and student groups alike.

    but us news in particular heavily weights peer institutional understanding – this is not really focused on research at liberal arts colleges, but rather selectivity (and perceptions thereof) and other prestige programs as understood by their peers/competitors. (contra rufus, i believe it is obvious that not understanding higher ed as a market is detrimental to understanding higher ed. period.)

    speaking from a professional focus on slacs, i can also say that us news tends to be a make or break proposition, and that being in the top 100 is good, but being in the top 50 is safe. beyond that? it’s a lot of 50k ish sticker prices, which covers a whole slew of schools, top ranked and otherwise, and who offer very similar amenities, majors, outcome stories, etc.

    tldr for a slac, research is a nice button but secondary to many other considerations.

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  21. Vikram,

    This post is simply fantastic. It gets to the real issue better than Scott Alexander’s, Meghan’s, Freddie’s or the various economist’s interpretations I have read recently.

    Indeed, this is my favorite post on OT in several years.

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