Here’s a novel explantion of the tremendous increase in the willingness to pay for higher education:
My hypothesis is that it is precisely the dumbing down of U.S. education over the last decades that explains the increase in willingness to pay for education. The mechanism is diminishing marginal returns to education.
Typical graduate business school education has indeed become less rigorous over time, as has typical college education. But typical high school education has declined in quality just as much. As a result, the human capital difference between a college and high-school graduate has increased, because the first increments of education are more valuable on the job market than the later ones. It used to be that everybody could read and understand something like Orwell’s Animal Farm, but the typical college graduates could also understand Milton or Spencer. Now, nobody grasps Milton but only the college grads can process Animal Farm, and for employers the See Spot Run–>Animal Farm jump is more valuable than the Animal Farm–>Milton jump.
That’s consistent with a point that I’ve made here from time to time: that what was expected of an eighth grade graduate a century ago was tremendously greater than what is expected now.
I would also propose a demographic explanation. The cohorts that follow the Baby Boomers are significantly smaller than the Boomers and, since they’re younger, less experienced. More higher education, certifications, etc. enables them to compete for the relatively few jobs that are being created with more experienced competitors.
Hat tip: Tyler Cowen