Sunday, July 24, 2011

The Cost of College: Dollars and Sense

While I was spending some quality time in the airport last week I read a set of interesting articles about whether a college education is worth it. In the anti-college corner there is this article from the Huffington Post, and in the pro-college corner this article from the New York Times, both of which I found from this rather uninspiring TIME article. Whew, now that I've linked them here I can close three tabs and tidy up my browser a bit!

The first thing that occurs to be about these articles is that all of them, whether they are arguing for or against college, argue using projected earnings/debt and other economic factors. This leads to two related but distinct questions, how do we measure worth or value and what is the purpose of college? I intend to address each of these in turn, and although I wanted to make this post about education I think I shall begin with the former, as it will provide us with a philosophical context from which to approach the latter.

So, how do we measure worth or value? Borrowing heavily from the ideas of Marx, put forward in the first volume of Capital, there are two different types of value. "Use value," is the purpose for which we use something. For example, the use value of your hiking boots may be that they keep your socks relatively clean and dry, provide good traction, and don't give you too many blisters. To REI the use value of those exact same boots may have been that they can be exchanged for money. If they were a gift from a friend, the use value of the boots to that friend may simply be the smile on your face when you open them. Use value, it's the practical reason for you to have something.

Contrasting with this there is the idea of "exchange value." Exchange value attempts to capture the relationships between different goods or services. For example, we might say the boots are worth a guitar, two Avril Lavigne CD's, or $34.50. Note that this says nothing specific about the use value of the boots, we don't expect you to strap the CD's to your feet and hike about in them. It is intended to capture something about preference, people would rather have hiking boots than one CD, but would rather have three CD's than the boots, and consider the boots and the CD's about equally desirable. For convenience, economists like to express exchange value solely in terms of dollars these days, which makes a certain amount of sense, on the assumption that everything is interchangeable, since we can always convert the value of something into dollars.

At this point the mathematician in you should be wondering if you are comfortable with the assumption that everything is interchangeable. However, let us continue to hold that assumption for the nonce. Even then, just because everything can be expressed in terms of dollars does not imply that we can simply consider the dollar values involved. Calculating the expected earning of someone who does not attend college and comparing it to the expected earning of a college graduate having subtracted the interest earned over a lifetime for the money that one spends on college might not fully capture the worth of college. One might imagine that the education obtained at college would have some value to the person earning it independent of future earning value, but that is a topic for another post. Under the interchangeability assumption, this extra value can be expressed as a dollar amount, but that dollar amount should not be ignored.

That said, how realistic is the interchangeability assumption? Could you put a dollar price on your happiness, a sibling, your right leg? In order for every value to be converted into dollars, we must be able to assign a dollar value to such things. I have a post entitled, "Women Are Worth It," in which I by no means assign a dollar amount to the value of an equitable society. It seems a little more reasonable to assume that there are some things which, although they have value, are literally priceless. Oddly enough, these priceless things may indeed have a price tag. For example, to a person dying of thirst in a desert, a bottle of water must seem of value beyond price, yet that bottle may indeed be purchased for a set amount of money in a supermarket.

So, when we next consider the value of education we must consider not only the literal dollars and cents of the matter, but also whether there is value which is not obviously measured in money or even ineffable and impossible to capture with trap shaped like a dollar sign.

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