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Not So Subtle

Inside Higher Education reports today on a new study by the College Board which talks about all of the non-pecuniary benefits of attending college. This should be celebrated, right? Well, not if you care to protect your pocketbook. It doesn’t require a reading between the lines to understand that when the report says that there are many benefits of going to college beyond higher earnings of graduates, that it is saying that there are “network” or “spillover” effects from attending college. And standard economic theory suggests that when these effects are present (plus some other conditions), then a case can be made to subsidize the activities which produce these effects. But this is just another in a long line of wails from those inside of higher education claiming that they need more money. After hearing about this funding crisis for three decades, and understanding that our higher education system ranks at the top of virtually any international metric, it is really hard to take these claims seriously. Plus, even if these spillover effects existed, is it entirely clear that more voting, for example, is better for America?

Anyway, what gets me is a quote from the article which talks about how even the financial benefits of going to college are understated, because an important part of employee compensation is made up of non-wage benefits. Here:

The report also notes that the availability of employer-sponsored health benefits and pension plans increases with every level of education attained. More than two-thirds of full-time employees with at least a bachelor’s degree have access to pension plans, while only 53 percent of high school graduates have the same access. The level of participation in the available pension plans also increases as education level rises.

Why does this steam me up? Because the same people who write this are the same folks that like to argue that standards of living have not improved over the past 30 years. They do this by looking only at income and earnings, and totally ignore any non-wage compensation (leaving aside the issue of whether even these income figures reflect what it is suggested they reflect … i.e. inflation measurements and difference in cohorts make average income data in the cross-section over time hard to interpret). Why are non-pecuniary factors so important when it comes to measuring the value of higher education, but when it comes to assessing American living standards, they are sneered as being irrelevant? You can’t have it both ways.

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