Today at Cato Unbound, University College London economist (and James Heckman student) Pedro Carneiro replies to Murray’s claim that the value of a BA is vastly overblown. A sample:
Recent research shows that, empirically, the expected rate of return to college varies widely across individuals: as we expand college attendance we attract individuals which are increasingly less suitable to attend college, and which have lower expected returns to college than the ones who are already there. Nevertheless, these studies also show that most people can expect a relatively high return to college. Even if we take the most pessimistic estimates for the return to education for those outside the elite (who economists would call the marginal students), they are probably above 7% per year of college, and they are not lower for a year of a BA as opposed to a year of any other type of post-secondary schooling. Individuals for whom a BA degree is truly a bad idea are just not enrolling in college anyway. In fact, the best predictor of college enrollment, or of completion of a BA, is cognitive ability, and most individuals with low levels of cognitive ability end up never enrolling in college.
So, what’s the punch line? Murray is correct in stating that a BA is not for everyone, and may be right in saying that some people are wasting their time getting a BA, but for most of the population I doubt that the case he is making is of great importance. As he says, firms are not stupid, and will not pay for a BA degree if a BA is not teaching anything to their potential recruits. Similarly, I believe that individuals make mistakes, but at this level they are probably not as serious as Murray is implying. For most of those enrolling in college, a BA has a good expected return, but there is some risk.
Coming up on Friday: Bryan Caplan.