Ryan Avent does not share the skepticism of the value of a four year college degree that was expressed by experts in a recent New York Times article, and by many commenters on that article, including myself. While I think he offers a useful overall counterpoint to the skeptics that is worth reading, he does have a couple of points that I want to disagree with.

First, is his point that

…wage premiums indicate that markets are certainly interested in having a larger pool of university graduates from which to hire, and increasing that pool by shrinking the pool of non-graduates would help meet that need while also striking a blow against income inequality.

Ryan may be drawing on wider empirics here to support this, but I don’t think this particular data point by itself is very valuable. One reason is because the wage premium of college graduates is reflective of two things: innate ability, and the returns to a college education. Thus the gap by itself does not distinguish between the demand for innate ability and the demand returns to education. Also, it is the marginal wage premium, and not the average, that is of interest here. The average (meaning the wage premium  for the average college graduates) may be positive while the marginal (meaning the college wage premium for the student who is on the fence between attending and not attending) is zero or at the very least much much lower.

In addition, we would observe the wage gap growing over time if every year colleges lowered their bars to let in the highest ability of the non-college cohort, thus lowering the average overall ability of the non-college cohort relative to the college cohort. A growing wage gap driven by this phenomenon tells you nothing about the desirability of college.  Given the growth of University of Phoenix and it’s ilk, this story has some appeal to it.

Another point he makes is responding to the fact that 15% of postal workers have a college degree:

Of course, the Postal Service cut tens of thousands of jobs during the recession, and given changes in information technology, it’s unlikely that many of those jobs will be coming back. Who do you suppose is feeling better about job prospects now: the 85% of mail carriers without college degrees or the 15% with them? In a volatile labour market, the flexibility of a credential is of crucial importance.

I am a little surprised to read this from Ryan, who has argued very persuasively against homeownership on the grounds that it is a large, leveraged, illiquid, and speculative investment. For what is a college education but a large, leveraged, illiquid, and speculative investment? Banks can’t foreclose on a college education, but I would guess that given the option, many college graduates, both employed and unemployed, wish that they could erase their student loans in exchange for a hit on their credit score and having their diploma torn up and being legally prevented from claiming any college attendance.

Also, the question here is not just whether a newly laid off, or at risk of being laid off, worker with a college degree would be better off without that degree, but whether they would be better off with the money they spent on that degree. I think many people would be better off with the safety net and flexibility provided by a large savings account or other liquid investments than with a degree that they weren’t even using before they got fired and that may be in a field that has either completely dried up or they no longer want to work in. I suspect there are many individuals right now who find themselves in such a position, including some of those postal workers.

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