Entry 6: Opportunity Cost of a College Education

The video talks about the relationship of college and future success. It depends on a lot of factor and sometimes it doesn't pay off. However, usually it is the case that if one goes to school, one would do better in the future, statistically speaking. Marginal analysis is the added cost and added benefit is of one more unit, say, one more year of school, or one more 4-years of school. Marginal analysis helps people make rational choice by allowing us to see whether the added cost is greater or less than the added benefit of consuming one more unit of whatever the decision is, one more piece of cake, one more can of soda. If the added benefit outweighs the added cost then it's a good decision, if not then the decision would have a net negative effect. The marginal cost of going to school one more year is the cost of tuition, transportation, and all those spending that is necessary and proper. However, the cost doesn't just stop there. Cost isn't confined to the material goods or currency but also it can be for time spent or brain damage from overstudying. It might be the case that college graduates earn an average of $1 million dollars more because from statistics we see that many people who don't go to college don't get many high paying jobs or end up with no jobs at all. Although it is the case that many college graduates are also unemployed, it is also true that there are a lot of college graduates who get a good job straight off college that brings up the average. Some students, after considering the cost for college, decide to quit. Reasons differ from case to case. The reason Bill Gates and Mark Zuckerburg quit school is because they feel like they can earn more with the time they spent on college rather than considering the cost of tuition. However, for some college students, the reason they drop out is because they face financial burden too heavy for them to continue school. Parents often tell us once you finish college and get master's degree you will have a great life ahead of you. That's not necessarily true. They, along with their kids, invest money, time, and energy to chase the fantasy and it doesn't always pay off. Why then do families continue doing so? Because they see that the average benefit of all graduates before them is higher than the ones who don't graduate college.