Annie Lowrey posted an amusing
article the other day defending the value of a college education. She's got a dog in this fight, having (per Wikipedia) gotten hers at Harvard and presumably paid dearly for it. She undercuts her own case with this delightful quote:
Prices for the two goods spiked about the same time, too. The average sale price of a new home was $155,600 in Sept. 1995. It peaked at $329,400 in March 2007. The rise in the price of new homes tripled in comparison with the rise in the price of everything else. The same happened for college tuition, whose spiraling costs bounded past the general rate of inflation. The average price of tuition at four-year colleges, in constant 2007 dollars, climbed from $8,552 in 1980 to $20,154 in 2009.
There was no logical reason for these price escalations. Neither college educations nor homes had become less plentiful in relation to the size of the population, justifying a dramatic increase in price. Nor had a four-year education or an average new home improved significantly, at least not enough to justify the extraordinary costs. Irrational exuberance had seized both markets.
No logical reason. Because subsidies have no effect, elasticity of supply is irrelevant, and economics as a whole is entirely made up. Ms. Lowrey is often seen on
Slate defending such advanced economic concepts as marginal propensity to consume as it applies to unemployment benefits, but apparently the poor girl never sat through an intro to micro course. Or do they teach some fantastically advanced version of intro to micro at Harvard, one far beyond my feeble public university mind? I'm not going to bother parsing the quote any further; if you're reading this blog you can already see the problem.
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