WSJ.com | Moshe Milevsky | Think Smarter About RiskHat tip to my buddy D.R. for passing on this article about considering your human capital when thinking about your asset allocation and diversification.
Recall that the dividends you receive from your human capital are not solely the result of hard work, innate skills, fortuitous parents or sheer luck. Rather, these dividends can be traced to the investment of time, money and effort during your student years. The skills you acquire in your late teens and early 20s set the stage for the value of human capital. Surgeons who spent more than 10 years as undergraduates plus medical school and then internship and residency invested in their human capital. They were not consuming time. They were investing time.
Therefore, in my opinion—and this might get me in trouble with my academic colleagues—too many students (and some parents) view education as a consumption good. They immerse themselves in a liberal-arts degree and study dance or literature or dance literature, without any regard for how this might influence the future dividends of their human capital.
I like these paragraphs in particular. I think this gets at some of the disfunction of the Higher Education Bubble. We subsidize college degrees without regard to how productive they actually end up being, maintaining a sort of willful fiction that all education is equally valuable to society.
I think we need to stop thinking about subsidizing education and start thinking about education-as-investment and education-as-consumption.
I'm all in favor of people dedicating time and resources to consumptive education — I chose to go to Notre Dame largely because I could take art and history and film and philosophy classes while getting an engineering degree — but I'm not so sure why we should be asking the rest of society to subsidize what amount to educational luxuries so highly.
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Usually when I write things like this my friends who studied humanities get sort of offended. Dudes: I am not slagging on your majors. I think that stuff is valuable. I just think we need to rethink encouraging people to take on mountains of debt pursuing it, asking the rest of society to help people take on that debt, and all the while telling kids that a college degree is the ticket to success regardless of what the degree is in.