Is College Still Worth It? The New Calculus of Falling Returns [pdf] • Hacker News Board

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#271

Post by sokoloff » Sat, Dec 28, 2019, 4:25 PM UTC

dahart wrote: post #260

xyzzyz wrote: post #254

Earlier quoted context omitted.

> Since graduates and postgraduates are earning, on average, roughly 2x and 3x non-graduates respectively The original paper that this whole discussion is happening in the context of literally says that the college premium is very low, and for non whites practically zero. The whole issue is that society-wide, college education doesn’t increase the wages of people. Yes, the college educated people make much more than…

No, income taxes are extracted before the premium is calculated. I’m not talking about the wealth premium that a degree gives you, I’m talking about the income taxes that the government extracts from people who have degrees, which is completely unaffected by the recent downward trend in the wealth premium that this paper is calculating. This is a case where the absolute, uncontrolled data is very important to differe…

What the “other” side is arguing is that if you’re using these income taxes as justification for the government backed loans because those loans allow the attendance of college, then it matters whether or not those same people going directly into the workforce, starting working 4 years earlier, and using their talent and ambition would end up paying a similar or greater amount of income tax. In short, you’re saying only the outcome matters and they’re saying the outcome might not be caused by college attendance.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#272

Post by dahart » Sat, Dec 28, 2019, 4:26 PM UTC

malvosenior wrote: post #262

dahart wrote: post #258

Earlier quoted context omitted.

That isn’t supported by the data we actually have. Please take a look at Figure 3 on page 39.

That data doesn't reference the point I'm making. What I'm saying is that it's very possible that if the same people that got bachelor degrees instead entered the workplace, they'd have equal or greater lifetime earnings. To put it another way, earnings are correlated with an individual's talent and drive. Currently, many of those people end up getting degrees. It's a correlation, it's not the degrees that are causin…

You’re right, figure 3 doesn’t answer your question. But your point/topic is not addressing my original point. My point above was that income before taxes alone is what you need to evaluate whether the student loan program offsets the student loan default rate. The financial return on investment of the student loan program is determined solely by the increase in income, not the wealth premium.

To address your separate point directly, there are studies that attempt to directly answer the question you’re asking. For example: http://conference.iza.org/conference_files/CoNoCoSk2011/gens...

However, your conclusion isn’t shared by the authors. They show a positive return on college degrees, it’s just smaller than the unadjusted difference in income.

One probable factor for this is cultural bias toward giving jobs to people with degrees, and paying employees more who have degrees. Individual skills alone do not explain the difference in earnings, so despite the fact that talent correllates with income, the correlation is not 1, and thus it is not likely that the same people earn equal or greater without a degree than with. It is likely that the same person without a degree will earn less than with a degree, on average.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#273

Post by sokoloff » Sat, Dec 28, 2019, 4:26 PM UTC

sanj wrote: post #237

kryogen1c wrote: post #233

Earlier quoted context omitted.

>Most notably, the inability to discharge school debt in bankruptcy since 2005 may have had strong effects. >That last legal change remains bewildering to me. I have done no research on the matter, but my parents told me that doctors would go to school on loan for 7+ years, start a practice, and discharge all their loan debt through bankruptcy.

Student loans typically cannot be discharged through bankruptcy: https://www.creditkarma.com/advice/i/student-loans-in-bankru...

Prior to the law change it was much more common to get them discharged in bankruptcy. That’s why the law was changed.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#274

Post by rayiner » Sat, Dec 28, 2019, 4:30 PM UTC

dahart wrote: post #251

rossdavidh wrote: post #250

Earlier quoted context omitted.

Once the job market got better a couple years ago, the percentage of job postings which required a college degree dropped. In other words, the "requirement" was mostly a way of filtering, not something that actually increased productivity. Speaking as a person with two degrees myself, I can say that non-degreed programmers seem to be just as productive as those with degrees. In fact, CS majors in particular have a pr…

Productivity isn’t the metric that determines whether the government recoups student loan defaults, income is. And the income of graduates is still multiples that of non-graduates, as shown by the data in this article.

Individually, yes. But that doesn’t mean that people are making more money in the aggregate by more people going to college. If the government subsidizes college and that results in more people going to college, but employers just respond by taking previously non-college jobs and making them require college degrees, there isn’t actually more money in the economy as a result to justify the government expenditure.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#275

Post by sokoloff » Sat, Dec 28, 2019, 4:31 PM UTC

CydeWeys wrote: post #227

cipher_system wrote: post #128

Earlier quoted context omitted.

$29k is not that much is it? That is about what I ended up with for my degree in Sweden where higher education is free but you borrow for living expenses. I repay it with about $100 per month for 25 years. Perhaps the biggest difference is the interest rate which is government backed and around maybe 1-2%. According to first result on Google the interest rates on US student loans seems to be around 6-8%.

$29k is a decent chunk of change of you don't have a high paying job. It'll take you many years to pay off because of all your other expenses (housing, transportation, healthcare, food, clothing, etc.).

Yes, but think of it as someone else lent you money to be housed, fed, and clothed for four years while you earned no income. That’s going to cost money anywhere in the world, before a single book is purchased or lecture paid for.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#276

Post by oogali » Sat, Dec 28, 2019, 4:35 PM UTC

achenatx wrote: post #212

kortilla wrote: post #180

Earlier quoted context omitted.

Not sure you understand. 1099 income means they aren’t an employee. That’s not the arrangement for people making $15-20. Those folks are regular employees so they receive that income after benefits, payroll taxes, etc. As a 1099 employee you need to be clearing at least double the equivalent employee hourly wage because there is so much overhead. Remember, a contractor doesn’t get a single day of paid vacation.

benefits only run about 30%. So a contractor wage should be about 130% of a salaried employees wage. This does not count when a salaried employee works more than 40 hours. My plumber charges 150/hour. Contractors around here bill by the job. I had bids for $5000 for a 1 day job for 2 people when incorporated into a GC bid. The GC was getting 25% on top of the 5000.

I’m sure I’ve missed a few things, but 30% doesn’t begin to cover the costs that are normally borne by a larger company and factor into the “house” premium.

You have to factor in not only benefits, but also:

* federal-level taxes (there’s no employer to pay the other half, so the contractor bears the whole portion)

* tools (you buy your own tools, stock your own spares, do your own maintenance on your dime — non-billable)

* learning and mandated certifications (same as above — non-billable)

* liability insurance (non-billable)

* vehicle maintenance, taxes, tolls, and fees (non-billable)

* transit time to and from not only contracted job sites, but also estimates that may ultimately result in no revenue (non-billable)

* marketing/lead generation (Angie’s List and HomeAdvisor are free to you, not to contractors — non-billable)

* material storage (you have the keep the customer’s plywood dry if the weather changes, or if the customer has a family emergency and needs to reschedule)

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#277

Post by xyzzyz » Sat, Dec 28, 2019, 4:35 PM UTC

dahart wrote: post #260

xyzzyz wrote: post #254

Earlier quoted context omitted.

> Since graduates and postgraduates are earning, on average, roughly 2x and 3x non-graduates respectively The original paper that this whole discussion is happening in the context of literally says that the college premium is very low, and for non whites practically zero. The whole issue is that society-wide, college education doesn’t increase the wages of people. Yes, the college educated people make much more than…

No, income taxes are extracted before the premium is calculated. I’m not talking about the wealth premium that a degree gives you, I’m talking about the income taxes that the government extracts from people who have degrees, which is completely unaffected by the recent downward trend in the wealth premium that this paper is calculating. This is a case where the absolute, uncontrolled data is very important to differe…

I’m sorry, but what you’re saying here doesn’t make sense. If, after controlling, college premium is zero, it means that if nobody at all went to college, the wages and thus also the tax receipts would be the same. It could be that in that scenario different people would make these wages than now, as the distortionary effect of college wouldn’t then deprive them of it in favor of some graduate from better school, but from the taxman point of view, it doesn’t really matter.

Education only adds value to the society if it allows graduates to do jobs that otherwise couldn’t be done without education. For example, surgeons require lots of education to do their jobs. If nobody educated surgeons, those jobs wouldn’t be done. Thus, educating surgeons does increase tax receipts.

On the other hand, education obtained in an MBA degree isn’t really obligatory to do the job that MBAs typically do. If nobody got MBA, those management positions would be filled anyway, potentially by different people. This way, MBA is zero sum and has no benefit for society, though it does benefit the individuals who obtain it. Government doesn’t earn extra tax from educating MBAs, MBA programs just determine who will be paying that tax.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#278

Post by dahart » Sat, Dec 28, 2019, 4:35 PM UTC

rossdavidh wrote: post #267

dahart wrote: post #258

Earlier quoted context omitted.

That isn’t supported by the data we actually have. Please take a look at Figure 3 on page 39.

That doesn't say anything about which is cause and which is effect, which is what is relevant for an increase in college education to make a more productive workforce. In fact, the labor productivity growth rate does not seem to have significantly changed at all, even as the percentage which is college educated has gone up a lot: https://stats.oecd.org/Index.aspx?DataSetCode=PDYGTH

Again, I wasn’t talking about productivity, that is orthogonal to my point. I was talking about the income taxes that the government extracts from the workforce, and the income taxes the government gets are higher on average from college grads. Productivity is subjective, and while it matters indirectly to whether the economy is growing, it has no direct bearing on whether the government recoups it’s investment in student loans after losses from defaults. Income taxes directly offset those losses. Productivity... who knows, it depends heavily on your agenda and point of view.

To address your point directly, I don’t personally believe that non-grad programmers are as economically productive as grads on average. I would totally believe that non-grads are as productive at building UI widgets and CRUD apps and stuff like that. However, inventions and patents are absolutely dominated by people with postgraduate degrees. It’s not a matter of hourly output, it’s a matter of yearly compound interest, and the compound interest in computer programming is generated by research. It is overwhelmingly PhDs who are developing neural networks and AI methods right now, overwhelmingly postgraduates who are the architects of new hardware and of new software methods. These are the things making the computer industry grow larger in fundamental ways.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#279

Post by dominotw » Sat, Dec 28, 2019, 4:42 PM UTC

seem_2211 wrote: post #12

I have a degree from a no-name university in New Zealand. I'd do it again for a few pragmatic reasons. 1: Lots of companies will reject you on sight without a degree. I don't think it's a good thing, but it is reality. 2: With a degree your ability to move overseas dramatically improves. I moved to America after graduating. I flat out couldn't have done that without a degree. Points based systems immigration systems…

> • Grad school, in general, seems to be a rip off

In usa they are used as a path to immigration. 90% of grad students are foreigners.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#280

Post by nradov » Sat, Dec 28, 2019, 4:43 PM UTC

someguydave wrote: post #215

mdorazio wrote: post #99

Earlier quoted context omitted.

Even in the engineering field, pay is massively different for different types of engineers. Civil and mechanical engineers generally aren't making anywhere near what software engineers make in top markets, for example. Similar story with chemists working in biotech vs. physicists doing fundamental research.

“Software engineering” is not a recognized engineering discipline.

IEEE would disagree.

http://www.cs-tcse.org/