Yesterday I wrote that the US is moving towards a more Asian-style culture that is focused on manufacturing meritocracy, where elites are paying for more educational enrichment than the average American can afford. However, it isn’t really clear to me if Americans are really paying more for education and human-capital development or if we are paying more for lavish amenities at quasi-educational institutions. The data does not say how productive all that elite spending is. Elizabeth Armstrong and Laura Hamilton’s new book, Paying for the Party: How College Maintains Inequality, indicates that much of the increased spending on higher education is really an increase in lavish consumption activity. Colleges are becoming more like summer camp where fees have been rising even faster than tuition–74% in the past five years! Many college students are going into massive debt to pay for four years of partying. David Leonard and C. Richard King recently wrote:
At best, faculty members become a combination of cruise director, customer-service agent, and concierge, whose role on campus is to provide students with the most amount of fun. At worst, the faculty is an impediment and obstacle to the primary goal of parties, drinking, sports, theme weekends, and more parties.
So is inequality leading to more party schools and expensive summer camps or is it leading to greater pursuit of meritocracy among elites? I think there is some of both dynamics going on and greater inequality drives both greater excessive consumption and greater ability to manufacture meritocracy. That is why the higher education market has somewhat bifurcated into expensive party schools and elite academic institutions “where fun comes to die.” Lower inequality should reduce excesses in both respects. Colleges would not target the luxury-car segment of the population as much if that segment had less money and the median had more. And there would be greater economies of scale in offering more modest amenities in targeting customers with incomes closer to the median. And the elite schools that offer rigorous academics would get more students closer to the median income than they do now. David Leonhardt found that elite schools enroll very few students from the bottom half of the income distribution. For example:
I wouldn’t expect 50 percent of Harvard students — or even, say, 40 percent of Harvard students — to come from the bottom 50 percent of the income distribution. But 6.5 percent? To put it another way, do you believe that more than 93 percent of the students who are most deserving of attending the nation’s most prestigious, best financed college come from the top half of the income distribution?
Harvard has such a hard time getting low income students that they give need-based aid to families that earn $180,000 which is more than three times the median income. At Harvard and many other elites schools, $180,000 is considered low income. And one recent study found that richer students actually get more financial aid than poor students because richer students get so much merit scholarships! The best way to reduce these perversities is to reduce inequality and promote policies that benefit the median more.