Stay in School or Get Rich

Econ prof Tyler Cowen passes on word that, “The average net worth in 2006 of Forbes 400 members without a college degree was $5.96 billion; those with a degree averaged $3.14 billion. Four of the five richest Americans — Bill Gates, casino owner Sheldon Adelson, Oracle’s Larry Ellison, and Microsoft cofounder Paul Allen…– are college dropouts.

Presumably, extraordinarily smart people with enormous self-discipline and entrepreneurial drive benefit less from higher education than others. Or, maybe, this is just a skewed sample demonstrating that the mean isn’t a very useful measure of central tendency.

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James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. markm says:

    I’ve often thought that people with a high level of common sense and/or “street smarts” can do more with less than someone who is book smart.

  2. Dave Schuler says:

    No sale, James. The purpose of higher education is not to get rich i.e. this is not a skewed example. Actually, I think that those who do become wealthy on the basis of credentials are virtually by definition rent-seekers rather than entrepeneurs.

  3. James Joyner says:

    The purpose of higher education is not to get rich i.e. this is not a skewed example. Actually, I think that those who do become wealthy on the basis of credentials are virtually by definition rent-seekers rather than entrepeneurs.

    True on both counts.

    Still, one of the main arguments made for near-universal higher education is that it’ll lead to a more productive workforce and lift people to higher economic status. So, to the extent that those who are most successful in the economy are non-graduates, it undermines that argument.

    My guess, though, is that this is just a matter of a handful of super-rich people skewing the data.

  4. It is silly and statistically invalid to try and reach broad sweeping conclusions about the entire population by using a very small sample made up exclusively of people from the tail end of this particular bell curve. Assuming they could be identified, what conclusions might we reach from analyzing the 400 people at the extreme other end of this curve?

    The above notwithstanding, Dr. Joyner’s supposition about a few skewing the results can be verified easily enough by comparing the mean to the median of this sample if that data is available. If I misinterpreted the original post and the conculsions are only meant to apply to these 400 people, I still think any such analysis is invalid. My guess is that in this particular sample of data, there is little correlation between years of college and the size of their pile of money. In fact, I’d bet that there is little correlation between the size of their pile of money and just about any metric you can think of beyond those you listed (extraordinarily smart, enormous self-discipline and entrepreneurial drive) and one other element — the absence of bad luck, though I’ll admit I have no idea how you would measure that.

  5. Michael says:

    So, to the extent that those who are most successful in the economy are non-graduates, it undermines that argument.

    No, because the purpose of near-universal higher education is to raise the average productivity of the work force, not the top half percent. I’m sure a measure of the poorest 400 people in America would overwhelmingly show a lack of higher (or even lower) education. In fact, if you chose 400 people randomly, chances are the majority would not have higher education.

    On average, those with a higher education make more money, regardless of if that holds true when measuring only the top .5%, bottom .5 percent, or middle .5 percent.

  6. Tlaloc says:

    My guess, though, is that this is just a matter of a handful of super-rich people skewing the data.

    probably, I’d like to see the standard deviations for those means.

  7. Barry says:

    James: “Presumably, extraordinarily smart people with enormous self-discipline and entrepreneurial drive benefit less from higher education than others. Or, maybe, this is just a skewed sample demonstrating that the mean isn’t a very useful measure of central tendency.”

    No, this is just Tyler coming up with more foolishness. The whole comparison is ridiculous.