Malcolm Gladwell is Right. The High Cost of Higher Education is Embarrassing

The high cost of higher education continues to be controversial. Most recently, public intellectual Malcolm Gladwell, the witty author of best-selling books that use exemplary stories to explain social science research, has presented a moral dilemma: producing the best campus food or supporting the least wealthy students. In a podcast, he compares two elite East Coast private schools, Bowdoin and Vassar.

Bowdoin, in rural Maine, is consistently congratulated for its culinary excellence. Vassar, in Hudson Valley, is comparably praised for admitting people from families with lower levels of income.

Many schools, consistent with their identity, present themselves as supporting diversity — including along the lines of class. A standard means of measuring their success in this regard is the number of students who receive federal Pell grants. By definition, such individuals are likely to be less well-to-do and more “at-risk.”

Gladwell documents, however, that there are tangible differences in how much these intellectual communities make good on their promise. He does more than suggest, he straightforwardly states, that there is a choice to be made between practically having a Michelin star and awarding generous financial aid. Anyone with a pretense to be progressive would be embarrassed to spend on former over the latter, at least openly. (He notes Bowdoin isn’t the worse offender. He calls out New York University: its enrollment is global but presumably wealthy.)

Although Gladwell has performed a great service, with that bit of snarkiness to be found on the pages of his intellectual home, The New Yorker magazine, there are three additional points that should be noted.

First, the overwhelming proportion of students in higher education attend public institutions, not private ones such as Vassar and Bowdoin. Gladwell passes over a crucial point. As impressive as Vassar is, public schools are even better. 

The University of California, the finest public system of higher education anywhere in the world, easily surpasses Vassar on the measure of Pell grant recipients. A school such as Vassar, which has developed itself since it transitioned from all-female and considered merger with Yale, relies on an endowment as University of California depends on its state subsidy.

Second, higher education has long fulfilled another function. Even though we prefer to celebrate it as the engine of the American Dream, operating as and furthering the cause of meritocracy, it also sorts citizens into a stratified society. 

Nobel Laureate Kenneth Arrow pointed out that the complex of institutions filter and signal. They introduce us to social networks that mark us as future leaders or their servants.

Third, as much as Gladwell has the general gist of matters, he minimizes an important difference between his comparators. Private schools, both liberal arts colleges and research universities, that appear to be peers in fact are not at all equals. They compete with one another. But they do so with financial resources that are not similar much less the same. 

In his specific example, Bowdoin has an endowment of over a billion dollars; Vassar, under; in addition, Bowdoin a student body of below 2000; Vassar, above. On a per capita basis, Bowdoin has an endowment of greater than three-quarters of a million dollars, Vassar is about $400,000, only slightly more than half that.

Perhaps the most significant observation that Gladwell offers is only implicit: Higher education is a business. It happens to be dedicated to a good cause. It by and large enjoys tax-exempt status. 

But the economist who presides over Vassar, as well as the finance officials who are interviewed on the show, understand well that they have budgets to balance. Every college does.