Apart from arguing that if you have something on the ball then a college degree may be irrelevant to your future career, a point I'll return to in a bit, he also argues that the college educated may have destroyed investment banking, by moving it from privately held partnerships to publicly traded companies that no longer had financial stakes in the loans they were making and then by coming up with all these fancy derivatives that masked what is going on but encouraged a rush of cash to come into the business.
I've been puzzling on this second one for a while. First, while it is fairly easy to see the harm that was created from all of the financial houses going public, I'm not sure Cohan or most pundits on this matter have seen the good that was created. It may very well be that much of the good has been captured internationally rather than domestically or if domestically then only by high level executives in the large multinationals. But still, there has been phenomenal economic growth in many Asian countries and in Latin America too. Were the capital flows that Wall Street generated a significant force behind that growth? If so, it is a story that hasn't gotten a lot of press.
The other thing I don't get is why there isn't, in essence, a co-pay model in finance. In my way of thinking, when a local bank initiates a mortgage, it should sell a big piece of it but keep some fraction of the loan, say 20%, not out of its own good will but as a way to assure the market that the loan is reasonable. And if the loan is not reasonable, then the bank should have incentive to block it, which I believe is what you want for the system as a whole. The same thing should be true for the big Financial Houses. There needs to be a handful of big shareholders who put up some of their own cash on the loans. The exact same principle applies. The size of the loan is not the important thing here. The issue is whether the lender really believes the loan is a good loan and if he so believes, let him put his money where his mouth is. What I don't understand is why the market hasn't come up with this as part of the solution on its own, totally without government regulation pushing the matter. After all, with our health insurance we have to make a co-pay when seeing the doc or picking up a prescription. Surely the principle is understood. What keeps it from being realized? I don't know.
Let me get back to the value of College. Since I have had my students blog this semester I have inadvertently learned their views on a variety of life issues. One of those is the nature of the work they will be expecting to do once they graduate. Many of the students are remarkably instrumental in their views, with a good job a means only, seeing as their end goal to satisfy their recreational pursuits and hedonistic pleasures. In my Behavioral Econ class we read an essay by Joseph Persky about John Stuart Mill and his approach to homo economicus. That Mill put accumulation of wealth along with the pursuit of luxury and leisure front and center resonated with many of these students. What I've yet to hear from most of them is that either instead of in addition they want to do good work so that what they produce can benefit others or they want to work where they get direct enjoyment because it is a means of self-expression. Either they are too immature to yet have those views or because across both classes it is mainly Econ majors and Business students, perhaps this is a selection of students who are prone toward these attitudes. Given their view, however, it is not hard to work through the backward induction on the students' attitudes about their college education.
It is one thing to read Cohan reflect about the value of a college degree on the New York Times Web site. It is quite another to read current students blogging about the issue, much more brazenly than Cohan. In my behavioral class, the first topic I had students blog about was procrastination, based on a New Yorker piece by James Surowiecki. Much of the blogging and commenting on this topic was confessional in tone and substance. In trying to draw one team out in its thinking, where my sense is that we procrastinate about different things for different reasons and the term procrastination is a catchall that refers to multiple different behaviors, I wrote:
I share some of the issues with bill paying. I do the finances for my mom, who is 90 and with dementia. Though she owns her condo outright, there are two different monthly fees for different associations that care for the place, and other bills for her care. I haven't automated the bill payment because I want to "know" what is being spent, but I hate to write the checks even though once I do it is not that big a deal.One of the teammates replied:
The studying thing seems different to me because with students that's the main reason they are in college. It is not a trifling. I wonder if there isn't some deeper explanation going on with that. Perhaps we will peel some layers of the onion on that issue when we discuss in class.
Studying is such an arduous task that is many cases useless in the long run. This is due to the fact that business don’t really care that you did well in your Psychology or Economics class; they care more if you are able to help them in solving their problems . In response to Profarvan statement “”The studying thing seems different to me because with students that's the main reason they are in college.” Personally I don’t think the reason for being in college is to study but it is to receive a diploma with a fairly decent GPA no matter how it’s done. Hence, procrastination is an effective tool to put off studying until the day before the exam since cramming is effective to get a B/C letter grade most of the time.We are trapped in a nightmare made popular by Michael Spence. My visceral reaction to the type of behavior that stems from the above comment is to play tit for tat with such students. It's funny how they can get the better of you. Coming into the semester my goal was to inspire the students by having the class read about and discuss interesting stuff. Now I simply want to get even. And I wonder if it's just me or if this is how every instructor feels after a while from these sort of interactions.
In an article from Yahoo business it states that grades are not a predictor of success because if you can’t adapt or solve a company’s problems what good does a 4.0 GPA do. For example when I worked as a computer technician intern for a large corporation there were many full-time employees without a college degree or even a high-school degree. Not only were they better technicians than the college graduates they were smarter and more in tune what was going on in the emerging technologies. So I will keep procrastinating, I know the odds are stacked against me statistically but I will take the risk of procrastinating before an exam. I rather spend an extra 11 hours discovering and learning about new technologies than memorizing formulas and definitions that in the real world will be useless since a computer will do it for you the majority of the time. Hence I also agree with the statement of “ the present is more important to us than the future.”
To sum up, I think procrastination is highly useful in college due to the fact that “true learning comes with practical experience since there is greater depth.” So why waste time memorizing theory when you can procrastinate on Facebook talking to people and building connections that will probably give you a better chance at getting a job.
The student who made that comment doesn't come to class. I don't track attendance officially but I do become familiar with the faces that do show up. (And I learned what he looked like when his team made an in-class presentation.) It is their call. Interestingly for me, there are more absences in the behavioral class, which has mainly Econ majors, than in the intermediate micro class, which has mainly Business students. Those Business students have it in their heads to come to class and for many of them also have it drilled in to sit up front. Their diligence is perceptible and reliable even as their penetration into the economics is sometimes wanting. Witnessing that I wonder do they represent the norm in students we should be striving for?
I wish I knew.