The Value of Education

November 19, 2014 -

The Communiqué on Nov. 12 included a post on the value of education. That post generated considerable discussion. There were responses both for and against the arguments made by President Nelson of St John’s University and the Gallup-Purdue index. To review, President Nelson argued that economics and education are essentially incompatible, and that the “maturation of the student — not information transfer — is the real purpose of colleges and universities.” One response to the Communiqué came from UNM Professor Philip Ganderton, an economist by training, who said, “President Nelson makes the point that knowledge has many of the features of what economists call ‘public goods.’ Public goods are both non-rival in consumption (I can learn about complex systems at the same time as you, and my learning does not restrict or limit yours) and non-excludable in consumption (within reason — and class size — I can learn about complex systems while you also learn about them. Your consumption cannot prevent mine.) But the important point NOT MADE by Nelson is that public goods, including knowledge, are not free to produce. Even if they were free to consume, they are — in the case of higher education — very expensive to produce. The reason why economics and education are TOTALLY COMPATIBLE is because education has a very high opportunity cost, where many valuable resources are allocated to education that are then unavailable to the rest of the economy. Ignoring the production costs is like talking about demand without ever mentioning supply.”

I look forward to hearing more on this discussion below.