Higher education: Is it really the next bubble? | Hacker News Reader

Higher education: Is it really the next bubble?

economist.com

15 pointsgeorgecmu19 comments

"When I put the bubble hypothesis to Norton Grubb, professor of higher education at the University of California, Berkeley, his response in an email was that the bubble hypothesis was "ridiculous". He went on:

'The problem is that there are no other routes to better occupations and higher salaries anymore, except for those who have odd skills (athletes, rock stars, starlets willing to reveal all) - which most of us don't have.'"

Programing and start-up skills allow people to get better occupations and higher salaries without education. This is only going to continue to be more prevalent in the future; especially as these skills become more available to the masses through resources like HN and incubators like YC.

I think education is in trouble...

Don't flatter yourself... There is a lot that goes into building an advanced economy beyond startups...Not to mention start-ups need educated workers to become successful. This whole meme about education not being necessary is utter nonsense. Only someone who has the narrowest understanding of how our world works would subscribe to such a notion... do you want "half-assed"/"Sam teach yourself aerodynamics in 21 days" engineers building your aircrafts? I don't think so.

do you want "half-assed"/"Sam teach yourself aerodynamics in 21 days" engineers building your aircrafts?

I don't want "Sam teach yourself C/C++ in 21 days" programmers to code for me either.

You suffer from a common delusion here: everybody wants to program.

I attend a uni where probably 75% of students are in either science or engineering, yet I still come across a lot of people who don't like coding (example: my current roommate). Just because it's becoming easier for people to learn to program doesn't mean that people want to learn it.

What he fails to mention is that a lot of his salary statistics are self-supporting. If you have a doctorate than your primary source of employment is the education system. So it feeds back onto itself. You have people paying outrageous fees to get doctorates and then going to work for universities where they require the universities to charge even more outrageous fee to pay them.

If people stop paying those fees then the salaries collapse.

If you have a doctorate than your primary source of employment is the education system.

Really? Isn't academia notorious for its low salaries? And yet, according to statistics cited, PhD command the highest salaries on average. What could possibly account for this puzzling discrepancy? Could it be that in many fields in fact it's the industry that is the primary source of employment for PhDs?

If people stop paying those fees then the salaries collapse.

So what self-supporting feedback system is responsible for high salaries of workers with professional degrees?

EDIT: table of salaries at industrial research labs: http://www.cs.unc.edu/~azuma/IRsalary02.jpg

Academia is NOT notorius for low salaries. Your average Professor makes $108,000 per year plus generous benefits and a lifetime pension (think about that one because it means they don't have to save for their retirement which adds a lot to their bottom line)

Source: http://www.bls.gov/oco/ocos066.htm

As for your chart have you asked yourself who funds all those research labs? Until you know that you can't really judge either way (where I live for example most of the "private" labs are funded in part by UCLA)

Average _full_ professor, maybe? What percentage of PhDs make it to a full professor? What's the average salary for an average post-doc?

Ultimately, research labs like Google, Microsoft Research, Boeing, Dow Chemical, or Pfizer are funded by consumers and taxpayers. Not sure what labs in your area are 'funded' by UCLA (most if not all of UCLA own labs, I'm sure, get government or private funding) -- if you can give examples, I would appreciate it.

Having seen my university's financial statements, I can tell you that net tuition accounts for slightly less than 50% of our operating budget. The rest comes from external funding sources -- public and private funds. My department is fully funded from external sources and we're responsible for finding them.

Salary information for state employees can be found in many databases. I was surprised at how much professors at public universities make. For instance, at the University of Minnesota, one prof in the education department made $430,000. Almost every professor in the medical school made more than $400K. Economics professors made $350,000/yr and even some lowly liberal arts professors made more than $300K.

Part time instructors don't do that bad either. At the engineering school, $60-$70K to teach two classes, use of all campus facilities (library, rec center, etc), full health benefits, only work from August 15 until mid-May. And you don't even need a PhD.

Sadly, the site I used makes it hard to directly link to a specific query, but the tool I used is here: http://extra.twincities.com/car/salaries/

To me, this does not seem to me like poor academics suffering to do what they love. In fact, factoring in pensions, relaxed working hours and benefits it seems like much better overall compensation packages than almost any private sector job. Especially in Minnesota. Outside of certain physician jobs, nobody there really makes those sorts of salaries.

You mean you were surprised at how much professors at public universities may make.

Certainly, the stars will be offered a lot of money, and professors in the top medical and business schools will be paid quite princely sums. But you might just as well argue that a career in sports or acting guarantees a future of wealth and fame.

I'd be very interested in find out more about your Minnesota engineering school example. If you can't link in, maybe you can paste specifics here or on pastebin?

No, that is not what I meant. Many of my family members are academics so I am familiar with the odds of getting a job in academia. However, I never actually knew the real salaries. In fact, this search began because a chemist uncle of mine was curious as to what he could have made if he went into academia instead of industry. (Academia won, envy of college roommate ensued) I was surprised at how much the professors actually do make.

I realize it's hard to get a full tenured professor job, but I thought that once you got it, you maybe made $100K, tops. The University of Minnesota is certainly not a top school and the professors are by no means superstars, so their salaries were surprising. If a prof makes $300K at a 2nd tier university, I wonder what they make at a good school like Stanford or Harvard?

The engineering school example is actually a job I am trying to get. After finding out these salaries I thought "wow that seems like a nice vacation after killing myself at startups the past 10 years," and started looking for a position I could do myself. I know the salary through personal negotiation. On the salary survey site it is probably one of the ones listed as "instructor." I would prefer not to post the job ad as I don't need more competition. :P

this search began because a chemist uncle of mine was curious as to what he could have made if he went into academia instead of industry

.. and were successful in academia, instead of industry.

The University of Minnesota is certainly not a top school and the professors are by no means superstars, so their salaries were surprising.

UMN is actually up there in certain medical subfields (according to USNews, it's in the 30s overall, and #5 in primary care). In any case, as I said, med and business schools are in general a special case -- they have to compete with high salaries to begin with, and they can afford it -- professional students tend to pay their way.

However, the two tenured research professors at UPMC (which is up there as far as med school rankings go) whose salaries I happen to know, make way less than 200K. And as far as I know, tenure no longer comes with a guarantee of salary -- you have to get your own funding, i.e. get lots of grants.

In any case, I hope you get your 'vacation' and it turns out to be everything you expect )

Sources of funding vary widely for people with PhDs. If you have a PhD in a scientific field, especially from a place like MIT, the money is in defense, energy, and medicine. You might work for companies like Exxon-Mobil, or iRobot, or a National Laboratory.

Research at Universities is funded by the government and industry as well as by student tuition. The more promising the research (or the more persuasive the PI), the more likely it will be funded. And in science, it's quite common for the PhD to have been funded by those grants to begin with.

My understanding, and I could be wrong because I don't know the percentages, has always been that research done on energy and medicine is primarily done by Universities with government grants. Don't get me wrong. I don't deny there are jobs for PhD's outside of academia but we're talking about averages here and I still think the majority of PhD's end up being paid by a University of some kind (be it as a professor or in a research lab)

PhDs at a company like Exxonmobil aren't necessarily doing research in the classical sense, they are basically looking for oil.

But I don't know the numbers either. I do know that there are lots of Pharma companies doing drug research in the Cambridge/Boston area.

The outrageous fees don't go to the professors. Only an idiot or a teacher [1] pays to get a PhD - it's usually free, typically coming with a poverty level stipend. The salary after graduation is still very low.

I interviewed at a great startup which offered me about 3x what I was making as a postdoc and more than what my PhD adviser (a senior professor) makes. (I turned them down, in retrospect a mistake, but impossible to know at the time.)

The system is not supporting itself based on the tuition/fees of PhD students. Their cheap labor certainly allows the administration to capture more of the rents, but the system wouldn't sustain itself with only PhD's and PhD students.

[1] Many public school teachers get a pointless PhD in education since they get a guaranteed salary hike.

This was a pretty casual article, and the author does think the issue is exploratory, but there wasn't much depth of analysis. The graphs show only correlation between higher education and success, and if anything fit into the thesis that Thiel et al supports: people have a 'belief' in higher education (which explains the correlation--kids are told they HAVE to go to college, so the smart kids make sure they jump through all the hoops and get their degree) yet it doesn't truly educate the students in question.

I agree that there wasn't much depth of analysis. But the problem with Theil's thesis is that it doesn't really have much to do with what a bubble really is. There can be overvalued things that people believe in without it being a bubble. One of the big problems with a bubble is that it can "pop." There will be a widespread, more-or-less simultaneous realization that the core investment is worthless and the whole thing comes tumbling down at once, sending shockwaves through the whole economy. Asset freezing causes other businesses to fail, stock values plummet everywhere devouring life savings. This causes lots of harm to people and is why bubbles are scary.

None of the people yammering on about a higher education bubble seem to be discussing the issue in those terms. If automobiles are overvalued and people stop buying them, there might be some pain as the market adjusts and the existing industry dies but it's not a bubble pop.

It doesn't mean it's not something to analyze or worry about, the industrial revolution never "popped" and we still have the rust belt, but it's likely that throwing the word "bubble" around is just to get attention.

I would think a bubble requires something that can be bought and sold (gold bars, equity, tulip bulbs, condos in Shanghai). You buy it with the expectation that you can resell it for a higher price. Or, more to the point, you accumulate and hoard beyond what is sane or reasonable in the expectation of higher prices. For any given individual its difficult or impossible to say what the real value of an education is going to be in the future. Even if there are no prospects for someone with a degree in linguistics today, it doesn't mean that the degree doesn't open a door tomorrow, perhaps in a related field.

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