Saturday, July 12, 2014
Tuition and education
This is an interesting bit from NPR about the complexities of pricing higher education, particularly private education. The game many universities play is to assess a very high sticker price (US$40 to $50k), then give all sorts of grants and things to discount the real price once students have committed to attending the school. This gives the school the prestige and exclusive reputation of a high price, while making it more accessible to "consumers" who can't really afford that price. The article harks back to some of my previous reflections on the benefits and drawbacks of an "exclusivity-based" school system. It also reminds us of the arbitrary, non-market nature of much pricing in our daily lives and the economy in general (I would argue that this is increasingly a defining aspect of the economy as more and more businesses resemble scams offering services of dubious and hard-to-calculate value). This non-rational pricing gives the lie to an unquestioning belief that our world and our markets are populated by members of the entirely rational species, Homo economicus. As I cited in a prior post, Homo economicus is at best a useful theoretical construct, but is by no means an accurate description of human behavior. Homo economicus isn't even mathematically possible!