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awesome conversation and definitely something I have pondered as well while moving all this snow in Northern NJ. Also, its great to see two of the smartest guys I’ve followed via blogs and TV have this conversation: combine Felix’s knowledge of finance and economics with Chris’ knowledge of politics and you get one tough two-headed intellectual beast!
For those interested in fractal inequality, here is my article on the topic:
Section II gathers interesting inequality data.
Larry Bartels’s book, Unequal Democracy shows how, from 1947 to 2005, the 95th percentile did much better than those at lower percentiles. He then shows how those at the 99.99th percentile did spectacularly better than those at the 99.9th, 99.5th, 99th, and 95th percentiles.
There is some evidence that even within that top 99.99th percentile, inequality reigned. In 2005, the “Fortunate 400”–the 400 households with the highest earnings in the U.S.–made on average $213.9 million apiece, and the cutoff for entry into this group was a $100 million income–about four times the average income of $26 million prevailing in the top 15,000 returns.
Elite private higher ed is a great example of this.
Their labor costs have plunged as they’ve gone to adjunct and contract faculty. Why does tuition soar? Because they are building fancy facilities that attract alumni donor dollars. They feel free to plunge the middle class into debt. They subsidize the poor and the rich can pay. It is the middle class who take on huge debt and get a degree that takes them straight to debtor’s prison (figuratively).
Personally I think there should be Congressional hearings on this.
nyet, the elite private schools don’t typically rely on adjunct faculty as much as lower-tier schools do. I would be shocked if “their labor costs have plunged” as you suggest.
The large donors often wish to have their name associated with a project. That implies something impressive, something durable. They would rather build a new biotech facility than contribute to the operating costs.
There are several reasons why tuitions rise:
(1) There are plenty of people, wealthy and otherwise, who are happy to pay those tuitions. The elite schools are more competitive than ever.
(2) Generous financial aid packages mean the revenue is not simply the tuition multiplied by the number of students. If 3/4 of the students are already receiving discounted tuition, then an increase in tuition only applies to the remaining 1/4.
Note that the elite schools subsidize the middle class as well as the poor (who for the most part do not qualify for admission).
Finally, if you don’t like it then don’t pay. You can get a quality education for much less from the state schools. Nobody forces students to stretch themselves for an Ivy League education.
@TFF – why people stretch themselves to go to Ivy League schools is not for their supposed superior education but rather for their very real superior connections and the signalling power that Ivy League school presents to future employers.
Given two identical candidates, one who went to a state school v. an Ivy Leaguer. Which one is more likely to get the job?
The problem is, even that example isn’t completely true, most of the time, the state school graduate wouldn’t even get a chance to interview for the job!
TFF you are dealing with someone who has taught adjunct. I am happy to correct you.
Three decades ago, adjuncts — both part-timers and full-timers not on a tenure track — represented only 43 percent of professors. Currently they account for nearly 70 percent of professors at colleges and universities, both public and private.
Yes it is true that a smaller percentage of faculty are adjuncts at the most elite schools. But what is ‘smaller’ than a large per cent is still, in this case, a large per cent.
At a study that was done at 10 elite private and public colleges, it was found that tenure-track faculty teach less than half of the lower division arts and science credit hours offered at elite universities. They are taught by adjuncts.
The problem is pandering to stars, thus distorting the whole system of higher education. Tenure faculty at elite colleges have had their teaching load halved in the last 40 years. To compete for these stars, someone gets shafted, and that is the adjunct (and the undergrad).
The other ‘pandering to stars’ problem has to do with the wealthy clientele. The whole system becomes distorted by income inequality. I think it is immoral when elite schools like NYU and Skidmore let middle class kids graduate with 100K in debt. This is a general problem but I happen to know of specific cases at these schools.
I think there is an easy fix to this one. Simply make student debt non-recourse. At the moment these expensive schools have no limits on their ability to push debt on students. They are ‘debt pushers’, enabled by financial aid. At the same time, they are in a race with other colleges to attract top dollar elite students. Attracting the latter means shafting the middle class student. If it continues this way, we may as well bring back the debtors prison.
Make the colleges take some risk from pushing debt. That will bring down the cost.
Greg, it depends on the job. An Ivy League education signals a certain career path and expected corporate culture. On the other side, there are other organizational cultures that wouldn’t give an Ivy Leaguer the time of day. Of course, those almost certainly don’t pay as well.
GregHao, are those connections worth the price? If so, then why quibble? The system may not be “democratic”, it certainly isn’t a pure meritocracy, but it seems there is a strong demand for the product they provide — and yes, that product is a combination of education, access to brilliant minds, and credentialing. I don’t see a problem with that. More questionable are the wannabe schools that charge nearly as much without providing the same product.
nyet, I have experience as an undergraduate and graduate at elite schools, and as a graduate and adjunct at less-than-elite schools. I don’t believe any of the classes I took at elite schools were taught by adjuncts, though a few (when I preferred smaller sections to large lectures) were led by advanced graduate students or post-docs. Maybe that has changed, but I doubt it is as dramatic as what you suggest.
In contrast, the majority of my classes at lower-tier institutions were taught by adjuncts. A few of those classes were good, most were rather less than stimulating.
“At a study that was done at 10 elite private and public colleges, it was found that tenure-track faculty teach less than half of the lower division arts and science credit hours offered at elite universities. They are taught by adjuncts”
Is that weighted by class size? If you have a world-famous political science professor leading a 200 student lecture twice a week, when then breaks up into 20 student sections (led by grad students) once a week, an unweighted average would suggest that only 9% of the credit hours were led by a full faculty member.
As an undergraduate, I often had a choice between a lecture based course led by a top faculty member and smaller classes led by non-tenure-track instructors. It was quite evident in the course handbook which were which, so I never had any complaints. And I believe all of my 300+ level courses were led by tenure-track faculty.
Again, I’m not sure why this is a problem. I had access to brilliant famous professors, access to brilliant less-famous assistant professors, and access to brilliant postdocs and graduate students. The less famous professors were often the best teachers.
If you make student debt “non-recourse”, you’ll severely limit access to student loans. Whose interests are you serving with that? I doubt that would cause tuition to fall — the elite colleges have plenty of applicants to choose from. You’ll simply bar the door to anybody who can’t afford the entry fee.
I’m not saying it is wise to take on $100k of loans just to attend an elite school, but nobody forces students to do that. Eliminating the CHOICE is not beneficial to anybody but the wealthy.
Personally, I believe parents ought to give more thought towards paying for their children’s education. Save $5k a year per child and you’ll have roughly half the bill in pocket when you are applying. Unfortunately we’re told that taking this prudent course will prejudice financial aid packages.
@Curmudgeon – >>Of course, those almost certainly don’t pay as well.>are those connections worth the price? If so, then why quibble? The system may not be “democratic”, it certainly isn’t a pure meritocracy, but it seems there is a strong demand for the product they provide — and yes, that product is a combination of education, access to brilliant minds, and credentialing. I don’t see a problem with that. More questionable are the wannabe schools that charge nearly as much without providing the same product.> Save $5k a year per child and you’ll have roughly half the bill in pocket when you are applying.
hmm, for some reason my last comment rather got butchered up….
@Curmudgeon – you are indeed correct and bravo to those that don’t simply fall at the feet of the Ivy diploma.
@TFF – Firstly, my response was simply to answer your question of why people make the decision to stretch themselves, sometimes too far, to attend an Ivy. And I agree with you wholeheartedly on the real scammers here, are those wannabe schools that overcharge their students with none of the benefits of Ivy League pedigree.
As for simply saving $5k/yr, I don’t want to come off as snarky, but there are people out there for whom $5k literally means whether they eat or not. Do their kids not deserve the benefits of getting ahead in life?
This series of tweets by TED addresses this “problem” quite well:
http://twitter.com/EpicureanDeal/status/ 32170111901106176 && http://twitter.com/EpicureanDeal/status/ 32170311700979713 && http://twitter.com/EpicureanDeal/status/ 32171760992387072
GregHao, that is a bit of a red herring…
First, financial aid at the Ivy League schools is very generous for any family with less than ~$100k income. Harvard does not expect ANY family contribution from households with less than $60k income, and just a 10% of income contribution from households with $120k income. Nor do they require student loans as part of the package. A student of mine from a moderate-income household got into Princeton — and was thrilled because her cost to attend there was LESS than it would have been at her #2 choice (a state school).
Second, it is increasingly difficult for middle-class students to gain admission to the elite universities. While roughly half their students come from public schools, they are concentrated in the wealthier districts and wealthier families. Your family that cannot afford to save $5k/yr and still put food on the table is almost certainly NOT going to gain admission to Harvard. Which is a pity, since that family would get a free ride at Harvard (instead of accruing tens of thousands in debt at a “cheaper” school). In my view, this is the greater scandal.
Third, there are SO many ways that your typical family earning $80k-$100k could save an additional $5k/year. First and foremost, select a house that costs $60k less. Or choose something near public transportation, eschewing the second car. Or dump those restaurant meals and prepared foods. Skip the vacation. I absolutely have sympathy for a single mother earning $60k and trying to make ends meet. But there are a WHOLE LOT of families earning more than that who somehow think college will take care of itself. And I steadfastly refuse to have sympathy for people making more than I do who do NOT make the hard choices to live within their means and plan ahead.
I actually agree with TED, to a point. I gave up on alumni interviewing for my alma mater after a couple years in which the insufferable entitled students from prep schools that I interviewed gained admission ahead of the bright and engaging students from public schools. (Also got discouraged when the bill for attending my class reunion would have come to more than three months discretionary budget!!!)
But only “to a point”. For someone intending an academic career, or medical school, there is a distinct advantage to that ivy-twined degree and the added rigor of studying at a top institution.
The elite colleges ideally mix the two groups — the rich and powerful rub shoulders with some of the brightest minds of the generation. Perhaps benefiting both?
(Not sure where I first heard this aphorism, but…)
“Wealth” is earning 50% more than your brother-in-law.
> In my view, this is the greater scandal.
> For someone intending an academic career, or medical school, there is a distinct advantage to that ivy-twined degree and the added rigor of studying at a top institution.
I agree with you, to a point. I think the Ivies certainly lavishes attention upon its students but I daresay the Ivies don’t turn out better quality than someone who goes to CalTech or Rice. The point is, cream will always rise to the top, regardless of where they attend school. Again, I wonder if it’s more signaling power than actual excellence of students.
> The elite colleges ideally mix the two groups — the rich and powerful rub shoulders with some of the brightest minds of the generation. Perhaps benefiting both?
Possibly, but maybe to the detriment of both… That is to say, the brightest minds of the generation help to bring up the reputation of her rich friends while the rich contributes what? Another building or two?
GregHao, the old wealth supporting the Ivies allows them to offer some of the most generous financial aid packages. They truly are cheaper to attend than many colleges with lower advertised tuition, IF your household income is moderate. For some students, they may be cheaper than in-state tuition at state colleges.
And of course it is beneficial to scions of the wealthy and powerful to attend schools that are otherwise populated by top students. Raises their reputations, as you say.
I suspect the connections are valuable both directions.
“there are so many ways that the typical family earning $80-$100k could save an additional $5k”
Median family income in the US is $51k. Your “typical” family has an income twice as large. If you are so out of touch w the circunstances of actual working people you have no business commenting on how they should go about paying for their kids education.
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