Topic 6: Opportunity Cost of a College Education

Marginal analysis is when people make make decisions, they consider the next unit of it. For example, how many percent will my grade increase when I study one more hour. It is useful in helping you weigh the pros and cons of a decision made. It helps us see whether a unit of something will help the marginal benefit increase the marginal cost. The marginal cost of one more year of higher education is the time you spent studying and going to classes. The time may have been spent on working and we also have to consider the tuition and extra fees spent when studying. The marginal benefit of one more year of higher education is the chance to get a better paid job in the future. The argument that college graduates earn $1 million more than non-graduates may not be exactly accurate because the data might be skewed by the few people who earn a lot of money. Also, those who self-select to go into college are already predicted to earn more money. They would've done as well even if they didn't go to college. Some students leave college after one year because they think the marginal cost is higher than the marginal benefit of one more year of college. They may perhaps think they are wasting their time. Therefore, some people drop out to work and earn money. My parents have always believed in going to a prestigious college and getting a better job and pay in the future. This has always been the case in my family and I guess I have already been brainwashed by this idea too deeply to be easily affected by this short clip of video. Although sometimes I question myself for working so hard but in the end I might not get a good job. Even so, I am still going to apply to a good college for the benefit of my future, says Pamela.