What Are We Paying These Professors For

A few days back Bryan posted on more evidence for the signaling hypothesis, that is the notion that the only reason to go to college is to prove to the world how smart you are. Exhibit A is the fact that you only have to pay for classes that you are getting a grade in. Sitting in the back and listening are free.

Well, first off sitting in the back and listening is not free. There are the usual opportunity cost arguments but I’ll bring up a more fundamental point. I have been kicked out of lectures that I didn’t pay for.

Being an Aspie and hence an economist since birth I realized I could get a free education early on. So long as I didn’t interact or say much I was fine. However, once the professor noticed that it was a little snot-nosed kid speaking up they were quick to ask me “Are you a student at this school??”

I think the reason that you can get a free education is that the monitoring costs are high compared to the number of people who want to steal education. Now, why is it that more people don't try.

Well, for one historically the actual cost of tuition is low compared to the opportunity cost. The cost of devoting enough time not only to the lectures but to homework and studying were much higher than tuition.

Two, the grading and advising process do serve a function. We can talk about hyperbolic discounting or constrained rationality but the bottom line is that self-control is a serious issue. The fact that you are faced with a grade motivates you to do the work.

As a side on this the best advice that I can give for young students is show up. Go to class. Go to see your professor. Your natural sense of shame will take care of the rest. As long as you can get yourself into that classroom on a regular basis you will be too embarrassed to slack off – that much.

Three, embarrassment is a serious cost to most people. I am amazed at the opportunities that people pass up because they are afraid of embarrassment. Even if there was no formal sanction, simply having someone point out that you are a free rider would mortify many people.

For these reasons most people pay for their education. The interesting question is whether or not the percentage of free riders has risen as the cost of education has gone up.