Monday, September 04, 2017
What’s the Future Worth to You?
Like nearly everyone else, I spent much of the last week following the hurricane news out of Houston. In that context, I found this piece by Will Oremus about how different estimates of the future affect what we’re willing to pay (or put up with) now to be better off later. He was trying to understand why we fail to prepare for predictable, catastrophic events, like Harvey, but the principle can be applied well beyond natural disasters.
The application to education is pretty direct. Higher education costs time and money, and there’s no law saying that anyone has to have it. As its cost rises, we might normally expect to see demand slacken. But demand isn’t really slackening much beyond demographic decline. In other words, while the number of 18 year olds in many areas is dropping, the percentage of 18 year olds who go to college seems to be holding. Even as the cost of education increases, willingness to pay for it (individually) seems steady.
But willingness to pay for it socially -- that is, through direct institutional subsidy, rather than tuition -- is dropping.
I’m wondering if the discount rate offers a relatively straightforward way to make sense of that.
On the individual level, as Tressie McMillan Cottom spelled out in Lower Ed, many students enroll in higher ed not because they’re convinced it will pay off, but because they see a lack of it almost certainly not paying off. She calls college “negative social insurance,” which seems about right. If college is one of the only perceptible and accessible routes to the middle class, then many folks who aren’t necessarily big fans of school will pour in to improve their chances of receiving decent salaries. Degrees are not guarantees of solid incomes, but they still offer markedly improved chances in most cases. If you topped out at a high school diploma or less, it’s much harder to make it into the middle class than it used to be.
From this perspective, students aren’t so much paying for education as paying to avoid the economic plight of the less educated. That might explain the relative persistence of demand in the face of increasing prices, at least among the publics; we still haven’t reached the point at which it’s worth risking going without the negative insurance.
(Among non-elite private colleges, rising discount rates suggest that many have actually hit their price ceilings. That’s a grim place to be, institutionally, but I’ll leave that discussion to the folks more familiar with that world.)
Socially, though, we haven’t been as willing to spend. Using my own college as an example, the state was originally supposed to cover 33% of the operating budget. It’s covering 14%. The difference has shifted to tuition and fees.
Using discount rates as a lens, I can suggest a couple of readings.
One is that we don’t have as strong a belief in the future as we used to. I’ll come back to this.
A second is that we no longer connect education to prosperity. But I don’t really buy this one, given the individual behavior described above.
A third, and more disturbing, reading revolves around the definition of “you” in the question of what education is worth to you. My own greatest investment in the future is in the form of my kids. I’m willing to pay comically high property taxes primarily because they support excellent schools for my kids. I see the connection between what I’m paying and the future I’m ensuring, so I suck it up and pay.
But the more tenuous the connection, the less willing people are to pay.
Gail Mellow, the President of LaGuardia Community College, likes to advocate for per-student funding parity across sectors of higher ed. If community colleges got the same per-student funding that state colleges get, we’d be in far better shape. But we’re actually moving in the other direction. Why would that be?
I’m thinking it’s a symptom of a larger economic polarization. To the extent that the economic classes are pulling apart from each other, different sectors get identified with different classes. The folks with the money are likeliest to support the sector they can see their kids attending. If Skip and Muffy are likelier to attend Flagship State U than Local Community College, and LCC is likelier to have students whose parents have limited means, then we shouldn’t be surprised to see where the funding goes. As the classes pull farther apart, the funding levels pull farther apart.
In other words, the moneyed classes are becoming less likely to identify community and state colleges as relevant to them. They’re about somebody else’s future. And we’re less willing to pay for somebody else’s kids than for our own. The discount rate we apply to strangers’ futures is different from the one we apply to our own. It’s not about disbelief in the future, exactly; it’s more like failing to see the relevance.
That’s a much more disturbing reading, because it implies the desiccation of the idea of the “public” in “public education.” That’s where we have work to do.
Hurricanes are spectacular, abrupt, and difficult not to notice. (I read about one woman in Houston who discovered an alligator in her dining room. That’s the sort of thing that tends to attract one’s attention.) Class polarization is quiet, gradual, and easy not to notice, until it abruptly isn’t. It’s time to start some preventive measures.