Higher Learning, Greater Good: The Private and Social Benefits of Higher Education (review)

For more than two decades, the literature on the public good in higher education has overemphasized private returns (Pasque, 2007), an argument consistent with neoliberal reasoning on reducing taxes and disinvestment in education and social services (Harvey, 2005). These trends in the literature parallel the shift from grants to loans, the increased inequality in college enrollment, especially in four-year colleges, and the rise in public tuition. The public concern about privatization of higher education is a topic Walter McMahon thoroughly examines in his new book, Higher Learning, Greater Good: The Private and Social Benefits of Higher Education.

McMahon undertakes the task of modernizing human capital theory to examine the benefits of higher education. He not only examines the classic question of private benefits, as measured by economic returns to the individual in the form of earnings (Chapter 2), but also tackles the complicated questions related to private non-market benefits related to quality of life (Chapter 3), along with the social benefits of educational attainment (Chapter 4) and the research enabled by higher education (Chapter 5). His analyses are comprehensive and advance understanding of the costs of excessive privatization, defined as the shifting of the burden of paying for college from the public to individuals who directly pay for education. McMahon examines the roles of grants and loans relative to tuition and living costs, along with the consequences of inequality in educational access for wage differentials across income groups in the U.S. and globally. His arguments are compelling, as well as comprehensive. He makes exceptional use of empirical evidence and includes appendices of studies on which his arguments are based.

McMahon finds that the underinvestment in higher education has been problematic with respect to economic development in several countries, including the United States and South Korea. He concludes there is an oversupply of under-educated works in the U.S., which represses wages for uneducated labor at the same time the earnings for educated workers are rising. The shift in funding of public higher education from the federal government to states to students, along with the shift from grants to loans as the primary federal financial aid strategy, has accelerated inequalities in educational attainment. McMahon provides substantial, sound, and well-reasoned evidence of underinvestment and its consequences.

McMahon also highlights limitations in the higher education policy arena with respect to technology and changes in the labor market. He argues that technology changes have increased the productivity of American workers, which would become a sound argument for reinvestment in higher education if the topic were more consistently studied in higher education research. Most of the research done on the impacts of technology is in the domain of economists and sociologists, however, since research in the field of higher education usually stops at the institutional boundary. The intersection between the content of programs in community colleges and universities, technological changes in work settings, and employment should perhaps be a topic of interest to more researchers in higher education.

The last two chapters of the book delve into policy options along with the need for reinvestment. He considers well-thought-out arguments about increasing funding for Pell Grants and general subsidies to institutions that reduce tuition for all students. The analysis of options is not particularly new, but it is informed by his sophisticated rethinking of human capital theory.

There is growing understanding in economics of the link between funding of student aid and economic development. McMahon not only considers the link between education and economic development, he also examines and adds to the literature on student aid and other topics in higher education. He is an economist who has tried to take higher education research seriously, especially the contribution of Larry Leslie, who has often crossed these same boundaries in the opposite direction, from higher education to economics (Leslie & Brinkman, 1988; Leslie & Slaughter, 2001). Other economists who examine trends in...