Why Higher Education is Important

Because your job is your best asset.

Why? Because your job will always (well, not your job, but your job skills) will always be there, whereas your house and your stock portfolio can dramatically decline in value.

Although the piece never says it, it’s an explicit endorsement of higher education. The best, highest-paying, and most secure jobs all require college degrees. University Presidents make this argument all the time, just using different words.

Here’s a few choice grafs from the piece:

The cognition you’ve got up there in your head — your education and training — it’s worth something. We can extract value not just from our homes and our portfolios but from ourselves as well. The mechanism for extracting that value? A job. “The income you earn from working is like the stream of interest income you might get from owning a bond,” says Johns Hopkins University economist Christopher Carroll. “Think of it as a dividend on your human wealth.”

Human capital is worth quite a lot. Gary Becker, the Nobel Prize-winning University of Chicago economist, figures that in a modern industrialized economy, 75% to 80% of a person’s economic output comes from human capital (as opposed to, say, land or machinery). Of course, during the bubble years (first stocks, then housing), the noneconomists among us didn’t exactly think about it that way. “People became mesmerized by how rich they were,” says Becker, “and didn’t realize the crucial asset they had in their earning power.”

Some of the other interesting ideas from the piece (although all of them are at least somewhat interesting): Recycling the Suburbs and The New Calvinism (that’s for you, Rich).