Saturday, December 03, 2005

College $

The university nearby is attempting to raise funds again. The students are throwing their customary hissy fits again. Why do college costs keep rising? Once again, we turn to the law of supply and demand. If prices are rising, it means that there is more demand than supply. To fix this, prices rise, thereby reducing demand and encouraging supply. The demand for college education exists because it tends to provide a good financial return on the time and money invested. As prices rise, those marginal students (who will tend to benefit the least from college), will eschew education, thereby reducing the demand, and it will encourage alternate forms of education (such as online schools), that can expand to the meet the demand more easily. In short, the university should just add a 20% tuition hike, pay all their bills, and help the market rebalance.


Blogger Noumenon said...

Maybe it's not a case of supply and demand. Maybe it's rent seeking. Maybe college isn't a service, but just a ticket to the upper middle class, like a slice of spectrum is a ticket to the telecom market. So the price keeps getting bid up wastefully till everyone's paid just a little less than what the winners will actually get.

11:44 PM  

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