Take 2: What’s the Value of a High School Education?

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Apropos of my post yesterday about the true market price of a college education, which I pegged at around $75,000 per year, Matt Steinglass makes the point that although this is the value of higher education to society, it’s not necessarily the perceived market value to students themselves. Not all of them, anyway. Without federal aid, an awful lot of kids just flatly wouldn’t be able to afford this much or wouldn’t be willing to take out $300,000 in loans to get a degree. That might be irrational in a pure economic sense, but it’s probably true nonetheless. So if higher education were provisioned on a pure free market basis, it would probably result in a net loss of welfare to society at large.

To give this some more punch, Matt tries to apply the same logic to high school. After correctly deducing how I got my $300,000 estimate (it’s the amount that produces the supposed million-dollar value of a college education if it’s invested at 3% per year for 40 years), he takes a crack at figuring out how much a high school diploma is worth on the open market:

If I’m doing my math right [], it’s about $67,500. So we’re talking four years of high-school tuition at almost $17,000 a year. And, again, this is probably significantly low-balling the real value of that degree.

How many American parents can pay $17,000 a year per kid for their kids to go to high school? Say this math overestimates the present value of the degree, and the actual figure is only $10,000. How many parents could afford to pay that? How many can borrow that much on the private market? How many would be willing to, if they could? What percentage of American kids would graduate from high school if they or their parents had to pay the full future value of their education up front? Currently 70% of Americans graduate from high school; imagine that percentage dropped to even 50%. And here’s the money question: How much poorer would America be, how much lower would our GDP be, if only 50% of Americans graduated from high school? I think this is the way we need to think about the value of government subsidies for, and/or cost controls on, and/or provision of low-cost Skype-enhanced alternatives to universal college education.

Pretty much everyone agrees that high school ought to be universal. The value to society of having everyone get at least that minimum amount of education is worth the money we put into it. And yet, if it were a pure free market function, high school attendance would plummet. This would almost certainly not be the optimal outcome for society.

It’s not quite as obvious to most people, but the same is likely true of higher education. You might or might not believe that everyone should go to college, or even that we should be trying to encourage more kids to go to college. But it would almost certainly be a net negative for society if college graduation rates declined by a third. That’s why subsidized higher education is worth it, even if it irks you to shovel taxpayer dough to a bunch of snot-nosed kids so that they can earn higher salaries in the future. Having a big pool of college-educated workers is worth a lot to society, probably more than a free market by itself would provide. This is your tax dollars at work.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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