Politicians, including those in Indiana, are going down a perverted path believing that consumers should invest in education when the returns (income) on that investment justify the expenditure.
The idea that education is an investment has merit, but its value is more than just the earnings it provides. Education is a means of opening choices and transferring societal values between generations, a function often neglected or negated by parents. It elevates consumption in the present and enhances consumption in the future.
Students now are being counseled to go to those institutions and seek those majors that offer the greatest “value” for the “investment” of their dollars and time.
This approach to education is founded on thinking of people in terms of Human Capital, a concept analogous to Physical Capital (machines, buildings, et al.). It is contrary to the humanity of students, faculty and parents.
States now are rushing to develop databases to guide the choices of adolescents according to the statistical experiences of their elders. Young people are being directed toward schools and careers based on questionable information collected by many organizations and processed by state government agencies.
Aside from the exposure to corruption inherent in such a system, consistency over time is highly questionable. Faculty are mobile and good teachers are more mobile than poor ones.
Students are likely to change their career preferences as they mature, acquire experience, and assume responsibility for themselves and others.
The market returns to education are unreliable. How should students incorporate the future dynamics of the labor market, given the tendency of technological innovation to make jobs obsolete?
Today, long-haul truck drivers might have better returns on their training in the short run than English teachers. Over a lifetime, which job offers more satisfaction, security, occupational mobility, and greater earnings?
Much depends on the time-preferences of students and parents. How important is the fast buck? That is, if you have a high rate for discounting future earnings, long-haul truck driving might suit you best. However, with a low rate of discounting the future, you can be more comfortable with more distance rewards.
The current craze for gambling on stocks and sports, without any human interaction, satisfies a quest for action and immediate rewards. Education provides the knowledge and means for moderating that passion and advancing civilization.
Yet today, there is a movement to reduce the time spent at all levels of education from high school through college and graduate studies. This movement assumes knowledge is easily absorbed and utilized. Human capital, (labor inputs) can then be moved along a production line faster, using fewer resources, pressed into shape like a hamburger, and quickly sliced and fried like a potato.
MORTON MARCUS is an economist, writer and speaker formerly with Indiana University’s Kelley School of Business. He can be reached at mortonjmarcus@yahoo.com.
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