Education payoffs can be difficult to evaluate

Published 9:00 pm Saturday, January 22, 2005

This is the season for film awards of every description. Amid the glitter, glamour and glib interviews, though, there seems to be vague sense that something is missing. It could be originality.

There is no doubt that in 2004 the movie industry is fixated on sequels, remakes and adaptations of works with success in other markets. This is a risk-aversion strategy called playing the stats – believing that certain film characteristics can guarantee paid attendance. Some believe this is a recent phenomenon, but Hollywood has always been a place where the recycling of ideas was a respected and rewarded activity.

In his Hollywood days, for example, Ronald Reagan was once in a movie called “She’s Working Her Way Through College,” a remake of an earlier film starring Henry Fonda, which was itself an adaptation of a Broadway play. In this third version, the female lead was Virginia Mayo, playing a student who moonlighted as a striptease dancer in a nightclub. To take advantage of Mayo’s musical talent, the studio monkeyed around a bit with the original plot, hired Vernon Duke and Sammy Cahn to write some songs, and included a few dance numbers. The lyric of the title song opened with:

“She’s working her way through college, to get a lot of knowledge.”

The idea that someone as strikingly beautiful as Mayo’s stripteaser would be interested in knowledge, let alone pay tuition to get a lot of it, was considered difficult to believe in those days and is one source of the misunderstandings that move the plot along in this light comedy.

People go to college for different reasons today. Getting knowledge is still a goal for many, but economic motives have come to dominate our thinking about the value of higher education. Recently, for example, the College Board released a new study that concludes, essentially, that despite tuition increases it is still worth your while to go to college. The payoff is bigger than the expense.

But before we all rush out to apply for loans so we can go back to college, we ought to know what the College Board study, titled, “Education Pays: The Benefits of Higher Education for Individuals and Society,” says and what it doesn’t say. More specifically, do studies like this allow us to play the odds in our decisions about higher education and avoid any risk of a mistake?

Like any study that wrestles with so much data, the education study is forced to deal with averages, and that is why it should have some disclaimers for investors who plan to put substantial amounts of money and time into further education. To say that higher education pays off is a lot like saying that the stock market pays off. It does, on average. But the averages will not protect you as an individual from making ill-timed, unwise or unlucky decisions.

One example of the risk of applying averages is in the report’s section on the social benefits of higher education. According to the statistics, folks with higher education don’t smoke as much and are less likely to be incarcerated. There is no doubt that the statistics are true, but if you think that going back to college for a master’s degree is going to help you quit smoking or keep you out of jail if you continue to boost cars to pay for your tuition, you are probably mistaken.

The central idea of education pays – that you still get more than you pay for – is comforting for those shelling out today’s daunting amounts for tuition, housing, books and fees. People who complete four years of college will, on average, earn nearly a million dollars more during their working life than those who ended their formal education with high school.

But these are the averages, the stats. Whether a college degree will bring higher income has more to do with your field of study, motivation, ambition, energy and, yes, luck.

It is impossible to avoid the economics of any decision regarding further education. The amounts of money involved force us to consider higher education’s investment return, just as we would with any large expenditure. But the real payoff has to be how “getting a lot of knowledge” changes us. If that doesn’t fit our goals, no number of degrees added after our name will make us successful, any more than piling on more marquee names would make a guaranteed blockbuster out of “Ocean’s Fifteen.”

There is no risk-free life out there for us, any more than there is a risk-free movie to be made. And you can take that to the bank.

James McCusker is a Bothell economist, educator and consultant. He also writes “Business 101,” which appears monthly in The Snohomish County Business Journal.