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Good News on Tuition from the Conversable Economist

Summary:
One of my favorite blogs, both for its balance and for its focus on important facts and issues, is that of the Conversable Economist, written by Timothy Taylor, the managing editor of the Journal of Economic Perspectives. I would have written my note below as a comment on his recent post on spending on higher ed, but his post does not accept comments. Tim starts by writing:"Everyone" knows that the future of the US economy depends on a well-educated workforce, and on a growing share of students achieving higher levels of education.I know Timothy a little, mainly through email and partly by having attended a 3-day conference in Montana with him in 1985. In other words, I don't know him well enough to

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Good News on Tuition from the Conversable Economist

One of my favorite blogs, both for its balance and for its focus on important facts and issues, is that of the Conversable Economist, written by Timothy Taylor, the managing editor of the Journal of Economic Perspectives.

I would have written my note below as a comment on his recent post on spending on higher ed, but his post does not accept comments.

Tim starts by writing:

"Everyone" knows that the future of the US economy depends on a well-educated workforce, and on a growing share of students achieving higher levels of education.

I know Timothy a little, mainly through email and partly by having attended a 3-day conference in Montana with him in 1985. In other words, I don't know him well enough to understand the reason he put "Everyone" in quotation marks. Is it irony, because he has my co-blogger Bryan Caplan's dissent in mind? Is it because he knows that when people say "everyone knows something," that's not really true but it's almost true because everyone who counts knows that thing? I don't know.

But what's striking is that in a well-researched piece on higher education (all Tim''s posts are well-researched), he doesn't even mention Bryan's book. It's a pity. Tim brings thoughtfulness to every issue he tackles, but he takes it as given that of course the government needs to spend more on higher ed.

Even, by the way, if one rejects Bryan's view that higher ed is 80% signaling and 20% learning, and holds to the view of my Hoover colleague Eric Hanushek that the numbers are reversed, one would still have to justify having government spend more on higher ed. Most of the gains from higher ed, whether they are from signaling or from learning, are captured by the person received the education. So it's hard to justify handing taxpayer money to people most of whom will, because of that expenditure, be in the top third of the income distribution.

In any case, although Tim sees the news on government expenditures and tuition as bad, from Bryan's and my viewpoint, it's good. Here's his key paragraph summarizing the point:

This figure clarifies a pattern that is apparent from the green bars in the above figure [DRH note: the figure with green bars is a figure he posts on his site--it is not the one above]: the share of spending on public higher education that comes from tuition has been rising. It was around 29-31% of total spending in the 1990s, up to about 35-36% in the middle of the first decade of the 2000s, and in recent years has been pushing 46-47%. That's a big shift in a couple of decades.


David Henderson
David Henderson is a British economist. He was the Head of the Economics and Statistics Department at the OECD in 1984–1992. Before that he worked as an academic economist in Britain, first at Oxford (Fellow of Lincoln College) and later at University College London (Professor of Economics, 1975–1983); as a British civil servant (first as an Economic Advisor in HM Treasury, and later as Chief Economist in the Ministry of Aviation); and as a staff member of the World Bank (1969–1975). In 1985 he gave the BBC Reith Lectures, which were published in the book Innocence and Design: The Influence of Economic Ideas on Policy (Blackwell, 1986).

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