Text 30: a little learning

Once, going to university was strictly for the elite. Now, higher education has become a mass-market business. Across 17 OECD countries, the average proportion of those aged 18-21 in higher education has risen from 14,4% in 1985 to 22,4% in 1995. The cost has risen too: finance for higher education accounts for 1,6% of GDP. In most OECD countries, by far the largest share of the cost of university is met by taxpayers. Economists take two contrasting views of all this. On the one hand, they regard higher education as a sort of intellectual sieve, designed merely to identify the brightest future employees, rather than to equip them with productive skills. On the other hand, economists regard education as an investment, which builds "human capital", making individuals more productive and thus benefiting society as a whole.

The sieving theory clearly makes some sense. Job advertisements specify "graduate wanted"; companies trawl campuses to recruit future executives; many countries have rigid academic requirements for particular professions. All this helps to explain two striking facts: everywhere, graduates earn more than non-graduates and everywhere, they are much less likely to be unemployed. The OECD reckons, for instance, that British women graduates earn 95% more than women with only secondary education. And the mean rate of unemployment in OECD countries in 1995 for people aged 25-64 was 7% for people who had finished secondary school but a mere 4% for graduates.

If sieving were all that higher education achieved, there would be little reason for governments to subsidise it. For one thing, many people would willingly pay to study if that brought financial gain (although there might be a case for government loans for those unable to pay their own way). For another, to the extent that the sieving process benefits society as a whole, there are surely cheaper ways to sieve than through universities.

In fact, few students leave higher education without learning something, and what they learn probably makes them better and more skilful workers. The most direct payback, in the form of higher earnings and better employment prospects, benefits individual graduates. Individuals weigh this benefit against the costs, including both tuition fees and the earnings they lose by studying rather than taking full-time work. Society also benefits from those higher earnings, which result in higher tax revenues and lower payments for unemployment benefits and income support. But the gains are much smaller than those to individual students.

What else could justify society's investing in higher education? The common answer is that society as a whole also earns benefits in the form of faster economic growth. Recent economic research has supported the existence of a link by emphasising the role of human capital in promoting growth and innovation. Societies which invest more in education reap long-term rewards. Plenty of evidence suggests that economies, which invest little in education generally, perform poorly. But it is harder to quantify the relationship between growth on the one hand and investment in education, specifically higher education, on the other. If, because a country spends more on higher education, university attendance rises from 20% to 22% of the 18-21 age group, will the economy grow faster as a result? No one knows.

Two conclusions can be drawn from the OECD studies. First, more of the cost of higher education should be borne by individual students. This has been happening in America, where tuition fees have been rising much faster than consumer prices in general, and in Britain, where, starting from September, 1998 most students will have to pay J 1,000 ($1,651) a year in order to study. In America, where students typically pay almost half the cost of a degree, enrolment rates are the world's highest.

Second, some governments can readily cut the cost of university education without harming quality. German universities, which educate young people at an average cost of $8,400 a year, appear far cheaper than Canada's, which cost an average of $11,300. Yet, because young Germans often spend six years at university while young Canadians can choose flexible, high-speed courses, Canada's total cost per qualified graduate is less than half of Germany's. Society should invest in academia, but it should invest wisely.

Дата добавления: 2015-08-20