Smart Money Does not Seem to Be

Jack Hough, a writer at "Smart Money" in the most recent issue, made the "Case Against College." He argues that if two friends from similar backgrounds make different choices about college (Bill goes, Ernie does not) - that the numbers suggest that the more economic choice is to not invest in college and to save the money you would have spent.

But the choice that Hough sets up is absurd on its face. First, the unemployment rate for high school graduates is twice that of college graduates (according to a survey in April 2008 - the rate was 15.4% for high school graduates versus 7.4% for college graduates). That number only increases when you control for college graduates who stay out of things like "liberal studies."
Second, making the assumption that an eighteen year old will a) have the money they would have invested in college and b) would have invested it prudently - is just plain silly. Third, and although this data is becoming a bit more suspect, the rate of wage growth for college graduates has been considerably higher than for high school graduates. In the last couple of decades the level of wages for high school graduates has been declining in real terms. Another problem with his analogy is to think about which person Ernie or Bill is more likely to have disposable income to save. If college were not so valuable, why do so many countries try to emulate our model of fairly wide ranges of opportunities?

Ultimately, what a college degree offers is a wider set of options. Does it always pay off in economic terms - no. But are the odds a whole lot higher for a person who pursues a college degree or chooses the Alice in Wonderland option that Hough suggests - the answer there is not even close. I wonder a) if Hough went to college (of course he did) but b) It looks like he never bothered to study economics.