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ROI of College Going Way Down

It’s fall, and that means college for millions of kids who have no idea why they’re going back to school even after The State has freed them from the educational industrial system (i.e. the little rooms ruled by the boring adults they were locked up in for twelve years). It also means the media will report out-of-context statistics about the value of college to fool people into wasting more time and money on a failing asset:

“Despite falling wages and rising tuition costs, the value of a college degree is still unquestionably high, a new report shows.

A college degree today is worth $272,692 in lifetime wages — more than three times its value in the 1980s ($80,000) and more than double its value in the 1970s ($120,000), researchers from the Federal Reserve Bank of New York found. At its highest point, in 2001, the net value of a college degree was $338,000, according to raw data from the report.

But the Great Recession, which brought widespread underemployment and record-breaking student loan debt for college graduates, has greatly slowed that growth spurt. The value of a college degree has fallen 11% since 2007.”

I grabbed the graph in the article:

NPV Bachelors Degree

Looks like a good deal, but… context. Net Present Value is great, if it is presented with other metrics like opportunity costs and return on investment (ROI). A quick Google search finds the following graph about the rising costs of college (and this graph is in agreement with hundreds of others based on universally accepted data):


As one can see, the costs of college are quickly approaching the NPV of a college education.

In 1980, you are getting a 6:1 return on investment with a college degree, but by 2006 you’re down to 2:1. And remember, NPV here is calculated for the lifetime of the graduate. Most investments that take fifty years to get the full return on investment are expected to do better than a simple doubling (this is a gross simplification of NPV and ROI, I know we’re not technically talking about a “doubling” of the investment, but there’s no reason to get too complicated here.)

Since all resources have alternative uses, what if you took that 120,000 dollars and invested it in the world economy through something like Vanguard’s Global Equity Fund? It turns out you can expect a 9% annual return (assuming a lack of alien invasions or deadly meteors or other calamity) on that investment. This investment has a NPV of $322,000 assuming a 2.2% annual inflation rate. If you add four years of full time work at minimum wage to that number you get $386,000 dollars. So not going to college, getting a job, and investing the resources it would take to go to college and putting them in the market gets you a larger return than a college diploma. This is just an example, I obviously don’t have the clairvoyance to predict if the global economy will grow at such a rate. I present it only to point out what is missing from the article.

The value of a college diploma is going down while the costs are going up in a flailing national economy that has a ridiculously high underemployment rate. Borrowing to pay for college is considered a wise move by most of the people talking to these kids. Someone needs to present an opposing view so they understand the risks. In my view, college students are heading towards a cliff. And the rest of us, especially our media, need to get serious about the problem.

Interesting Abstract

Taking notes on laptops rather than in longhand is increasingly common. Many researchers have suggested that laptop note taking is less effective than longhand note taking for learning. Prior studies have primarily focused on students’ capacity for multitasking and distraction when using laptops. The present research suggests that even when laptops are used solely to take notes, they may still be impairing learning because their use results in shallower processing. In three studies, we found that students who took notes on laptops performed worse on conceptual questions than students who took notes longhand. We show that whereas taking more notes can be beneficial, laptop note takers’ tendency to transcribe lectures verbatim rather than processing information and reframing it in their own words is detrimental to learning.

The Pen Is Mightier Than the Keyboard, Advantages of Longhand Over Laptop Note Taking. Authors: Pam A. Mueller, Daniel M. Oppenheimer

Source, Link to Paper.

The Corrigan Diet

Douglas Corrigan, beyond being a character in my latest novel, was also an immensely fascinating person in real life. A pilot/engineer/mechanic who once crossed the Atlantic Ocean in a heavily modified aircraft, much to the dismay of federal regulators, he starred as himself in an autobiographical movie (which is totally worth watching, if you ever see it scheduled on TCM) and continued to work in aviation until his retirement. He once wrote to a fan that he had “no hobbies except working on airplanes or machinery”.

Corrigan was famous for working on aircraft in marathon sessions. He often slept in aircraft hangers. Corrigan was known to miss meals and completely forget about eating. And one can tell, even from photos of him later in life, he kept an unbelievably trim figure throughout his life.

When I first read about Corrigan, and encountered these two facts about him (his devotion to work and forgetfulness about food), I realized this could really be a fantastic paradigm for dieting. If you fill your life with activity, be it mechanical work at an aircraft hanger or just cleaning your basement. The more you do, the less time you have for obsessing over food. As I’ve lived my life, I have focused on filling my life with activities that are outside the home, involve physically moving, and take mental energy. The result has been modest but satisfactory weight loss. If you spend any amount of time reading about bariatrics, you will see many stories of men and women who never left their home, ate while at home, and didn’t do anything with their lives, other than eat.

Don’t let that happen to you. Get out of the house. Douglas Corrigan would approve.


Chart of the Day:



Tech is bad for Kids

Also, good parents are good for kids.

New York (Reuters) – Recollections of strict, unaffectionate parents were more common among young adults with an unhealthy attachment to Internet use, compared to their peers, in a new Greek study.

Young adults who recall their parents being tough or demanding without showing affection tend to be sad or to have trouble making friends, and those personality traits raise their risk of Internet addiction, the researchers say.

“In short, good parenting, including parental warmth and affection, that is caring and protective parents, has been associated with lower risk for Internet addiction,” said lead author Argyroula E. Kalaitzaki of the Technological Education Institute (TEI) of Crete in Heraklion, “whereas bad parenting, including parental control and intrusion, that is authoritarian and neglectful parents, has been associated with higher risk for addiction.”


SOURCE: http://bit.ly/1m8inLg Addictive Behavior, online December 8, 2013.

Why Everyone Screws Up Their Retirement

Because it’s math.

It’s actually not really all that mathy. Whenever you get a paycheck, move the decimal one space over to the left, and throw that amount of money into a separate account that you don’t draw money from except for emergencies. If you want to really get complicated, put that money into an IRA and spend an afternoon looking up “index funds” on the internet. You’re done. As long as you work during your working years, it will be impossible not to have a retirement fund. Avoid debt like the plague, and you will live within your means and not be broke. For most people, this is enough, and yet most people can’t accomplish this simple setup (we’re going to exclude people suffering from some calamity, for simplicity).

I always wondered why, and I have talked to scores of people over the years about finance, and as far as I can tell there are two complaints. One, it’s boring. Two, it’s math. (In fact, #2 explains #1; people assume it’s boring because it’s math.) Students, if they learn nothing else from our public schools, learn math is boring. No amount of persuasion can change this attitude.

The consequences are awful.

Money is the foundation of modern life. We work. Why? Well, among other things, it gets us money. We want goods and services… what do we need? money. We have families, how shall we feed them? Whatever we do, we buy it with money. Everyone is obsessed with money. Our entire culture is centered around it. And yet, despite the fact we’re slaves to money, many of us don’t want to talk about it, read up on concepts relating to money, or find out ways to make ourselves less of a slave to money.

Money is literally numbers. Our currency is math. It’s not gold or silver or hours of labor. Our medium of exchange are numbers, just numbers, often printed on paper.

The only way to be successful with money, and therefore be successful in life, is to defeat the mathophobia. And that’s impossible.

The Lose-Lose of Pay it Forward Tuition

[Speaking specifically of Pay it Forward educational plans being proposed in 17 or so states, not the moral philosophy (which I have no objections to).]

Here’s the basics of this program: instead of paying tuition up front for educational opportunities, students would agree to pay a small percentage of their income for the decades following their graduation. College would be “free” to start; if the education didn’t deliver a good job, you wouldn’t pay much for it. similarly, if you got a great job, you would “fairly” pay more for your degree. I have a number of objections to the program, which I’ll list. Let’s start out with the big problem: it doesn’t properly price education. It hides the price of education somewhere off in the future. Think of it this way, if you go to college and make a lot of money, you win, except now you pay more than what college would have cost you if you had paid regular tuition.

And if you lose, while you pay less than what regular tuition would have cost, you still lose because your education didn’t result in a better lifestyle or higher earnings. You wasted four years of your life, your big chance at bettering yourself, and you still owe extra taxes if you ever drag yourself out of the funk. It’s a major opportunity cost.

To summarize,

If you lose, you lose (you’re poor and wasted four years of life)
If you win, you lose (a lot of money through bad ROI)

Mathematically, almost no one pays what the education would cost under normal tuition.

In theory, we can say people are paying what their education is actually worth. In this case, I suppose we’re saying there is a “real” or, how Adam Smith would put it, a “natural” value to education. Education value is highly variable depending on the situation. A medical doctor will normally make more than an American Studies major. Thus, a medical degree should cost more than the American Studies degree. The best way to differentiate will be to charge for the education based on future earnings.

Here’s a problem with this line of reasoning, much of success is random or a product of family connections. I know plenty of people with law degree who live with their parents now. I also know college dropouts who are making six figures. There’s a lot of variance, but using broad figures, going to college seems to bestow some benefit to the enrollee. A benefit that is highly variable and a benefit that has been going down in value over the last decade. Taken altogether, we shouldn’t assume college is a primary driver of personal success. And if it’s not a primary driver of success, we should be ever more skeptical of this scheme. This setup will encourage more people to go to college, thus reducing the value of a college degree, and possibly costing them real opportunities in the private sector.

This scheme, by hiding the cost of college, will have the effect of not discouraging people from seeking worthless degree. If I’m paying, upfront, to go to college, I care about Return on Investment (ROI). If I’m not paying upfront, those concerns about ROI go away. More people will feel free to pursue the liberal arts without (apparent) consequence. Instead of pursuing a real opportunity, the individual will waste their time. Not a good thing.

Finally, we should think about the actual mechanism. Taxation is already ridiculous and will get more ridiculous as promised entitlements come due. Adding to your tax burden at a young age could have disproportionate outcomes later. But this is conjecture.

Higher education needs to reform. Colleges need to reduce costs, students need to pick better programs that teach real skills, and society needs to take coming student loan debt crisis seriously. Pay It Forward does nothing for the actual problems we have to solve, it only hides them, and that’s a bad thing.

From the Notebook

The store I work at is closing, and the amount of work involved in closing a store is surprisingly voluminous. So I’ve been incredibly busy as of late. There are only a few days left, then I still have to stay on for a couple of weeks to help with the clean out. I haven’t had a lot of time off since the announcement, so I haven’t had time for any projects. I did start a new novel just after Christmas, but I haven’t had time to really get it going yet.


- Listened to an old tape of Katie Goldberg’s writing seminar: Writing the Landscape of your Mind, held in the Twin Cities in the early 90’s. It was an interesting seminar, focused mostly on Zen-like stream-of-consciousness writing. Not really my thing, but I learn something from every writing how-to I ingest.

- Saw Captain America; The Winter Soldier. It was okay, I would have made a few changes because parts of the plot didn’t make a lot of sense. The ending was kinda stupid, and Hollywood clearly has no idea how to write for a character as ostensibly conservative as Captain Steve Rogers. But there’s some good stuff in there too. I’d recommend.

-In April of 2003, I decided to make a commitment to review every book I read and movie I paid money to see in the theatres, as a writing exercise and a way to keep track of whether I was maintaining my goal of reading a book per week and seeing at least two movies per month. Since then, for the last eleven years, I have done exactly that. I started out on Amazon.com, before moving everything over to blogger. I don’t think I will be doing that anymore. I want to devote more time to novels and other “big projects” and I’m also reading fewer books and watching fewer movies.

-Good friend John Stewart (of the “Night Writer” blog) was diagnosed with ALS (Lou Gehrig’s disease). He will be writing about the whole affair on this month’s Random Link:


God’s Blessing to you, Mr. Stewart.

The Case for Marriage

This is more or less an abstract for a longer article I’d like to write on the topic of marriage.

The Millennials are delaying marriage, and many are skipping the Sacrament altogether. There are a number of reasons for this, the recessionary economy for one, the cultural shifts caused by feminism for another. Government programs that serve to encourage single motherhood, or at least make it economically viable, could be a reason as well. Most recently, the collective male backlash against these processes, and against a legal system that favors the woman over the man in domestic disputes, might cause marriage rates to fall even further.

Yet, despite all this, there is a still a strong case to get married, assuming you can find the right partner. Very briefly, in a marriage the couple can nearly double their household earning potential while cutting expenses in half, cutting the amount of housework each individual has to do in half, marriage requires half the stuff (you don’t need two blenders, two microwaves, etc) and you otherwise effectively double your overall economic state in one instant.

The downside of marriage is still the risk of divorce, being forced into a heavily prejudiced legal system and its brutal child custody culture, and the possibility of marrying a spendthrift. Cohabitation is an option, but common law marriages are still the legal norm, so you have to pick your partner carefully anyway. The same mathematical economic results can happen with just a group of buddies choosing to live together, but the lack of deep emotional connections makes this an unstable and impermanent option. The best bet is to use divorce probability calculators to evaluate the likelihood of a longterm relationship surviving, creating a resolution structure early on to work through problems, and to delay marriage until the 2-year mark of any relationship.

From the Notebook

I didn’t really get a chance to celebrate, so I’m going to do it again: Somehow I lasted ten years as a blogger. Over that time, I published over 5000 posts. This is an average of two posts per weekday, 50 weeks a year, for ten years. Also, between the three primary websites, I averaged just over two thousand hits per month over that ten years. I’m just a little bit proud of all that, even if it’s been an ugly and barely readable blog since 2009.

I have no plans for the future of blog. My goal is not to publish anymore junk. I want to produce longer and higher quality posts, stuff that I could publish later. Also, I want to get serious as a novelist, and this means most of my spare time will be spent on large products, not this blog. And I don’t think anyone cares enough about anymore to get all worked up over this.

Annual Traffic Report:

2014 stats

Nothing much to report, though it is interesting that there was a huge increase in December when I had a flood of posts as I tried to hit that 5000 post goal I set for myself.

Books Read:

Aaron Clarey’s Bachelor Pad Economics. It’s an essential purchase for young men. I’m hoping to give it a full review sometime later.

Proverbs (RSV)

Audio Books:

Pauline Epistles, Catholic Letters, Book of Revelations (KJV)

How I Write by Janet Evanovich. The story of her struggling for ten years to get an agent and a publisher should serve as an important lesson for any wannabe writer. As far as writing is concerned, her suggestions are similar to other articles and books I’ve read.

CEO of the Sofa by P.J. O’Rourke. I’ve read the book before, but the audiobook is fantastic. Very funny, if a bit dated.

Other self-education:

Kmart Forklift operation and safety training. So, it’s work-related. Sue me. Just be thankful I didn’t mention every one of the 104 other learning modules I passed.

Random Link:



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