Too Much Education Is Bad for Us

How many times has this happened to you? You walk into a café, chat with the barista, and find out he has a university degree. This week, it was a café. Last week, it happened to me in a high-street shop. Despite the fact that I’ve spent much of my career working in higher education, I can’t help but wonder if we’re over-educating people.

Being a barista has its attractions — not least if, like me, you’re a writer who likes to gather stories. But you don’t need a university degree to do it. My friend across the counter had followed the first bit of career advice you ever get: stay in school. Get a degree. Because on average, people with degrees earn more than people without. But while correct, that has little to do with the education itself.

The basic argument for investing in education is that by learning new ways of doing things, we become more productive. Being more productive makes us more attractive to employers, thereby raising our market-price. Ergo, the more university degrees there are, the richer we’ll all be.

Except it isn’t true. Through primary and secondary years, every added year of education does raise both an individual’s and society’s output. But as Tyler Cowen shows, once you get to university, diminishing returns set in. Ha-Joon Chang points out that Switzerland, which has the lowest rate of university enrolment in the developed world, has one of its most productive labour-forces.

So why do people with university degrees still tend to draw bigger paycheques than those without? Because of what Chang calls degree inflation – that as the number of university degrees has grown, so has the worth of each one diminished. The café-owner doesn’t need people with degrees behind the counter. But if she can choose between a job applicant with a degree and one without, she’s more likely to pick the former for the simple reason that he’s proved he can learn what it takes to do the job.

The same principle operates in even highly-skilled trades and professions. In the same café, I struck up a conversation with the young woman sitting across the table from me. She’d done a degree in law at the London School of Economics and now devised models for a company that projected future demand in global commodity markets. Everything she needed to know to do her work, she’d learned on the job. Her employer had recruited her for the simple reason that if she’d been good enough to get a degree from LSE, she was clearly a good learner.

There are some jobs for which specialised education is essential – like if you want to be a research physicist. But for energy-traders or, say, teachers, it’s less clear. The best high-school maths teacher I ever had didn’t have an advanced degree in the field. On the contrary, he made a previously impenetrable subject fun because he was, in his own knowledge, just a bit ahead of his students and thus knew how to impart wisdom to even dunces. There’s actually little evidence to support the belief that requiring teachers to obtain higher degrees produces better teachers.

Worse, taking someone out of the workforce for four or five years reduces their lifetime output. Think about it. If you went to university and so started your career at say, 23 instead of 18, with an eye to retiring at 65, you’d end up working for 42 years instead of 47. That’s a whole tenth of your productive life chopped off. Meanwhile, you will have racked up student loans which will limit your ability to buy a house or invest in a pension. Think of how much richer you, and the society as a whole, would be if you went straight to work and begun accumulating your riches.

Unfortunately, we’re stuck in a vicious cycle. Because so many people are getting degrees, we each have to obtain degrees to prove that we are up to muster. Most employers, as the energy company did with my trader-friend, regard the university as a sorting-mechanism: a good degree from a good university indicates that someone is up to the task. But what might happen if a more efficient sorting-mechanism came along? In this respect, the big-data revolution could make things interesting. Human-resource departments have begun experimenting with algorithmic searches that identity prospective job candidates on the basis not of formal education, but rather the set of attributes that recur in their most successful hires. In some cases, they can identify candidates even before they go to university, and put them straight to work, training them on site.

Of course, there are arguments for university education that have nothing to do with economics: producing more rounded citizens, raising consciousness, pursuing the ‘good life.’ Yet not all of this need be delivered by universities. As a society, we might consider committing fewer resources to formal education and more to salon series or creative subsidies. As it is, we seem to be saddled with the deadweight of too many universities, and too many degrees.

Image: Yale University, New Haven, 2016




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