Managing Risk as a College Student



I often describe myself as a very risk-averse person, and my college life has been an example of that. From a practical standpoint, I think attending a university to gain knowledge is functionally useless; the whole of human knowledge is available online in my pocket at my demand. I also tend to shy away from the necessitation of most accreditations, since I tend to lump most of them into the fallacy of argument from authority. When I describe why I’m on this campus, I almost always use the phrase “I’m here to buy a degree.” Barring the small likelihood of failing out, you achieve the requisite accreditation via an investment of four years and thousands of dollars. It’s a buy-in similar enough in my mind to the medallion system that taxi drivers have. However, the fact of the matter is, in this country at this time, a baccalaureate is required for good job placement, and the risk-averse person wants a steady job. Getting a degree, thought, requires such lofty financial commitment that what most people actually get out of it is a hefty sum of liabilities they’ll never pay off. Therefore, it was incredibly important to me to manage my risk throughout my college career, making sure I was in the right major and would be able to escape with as little debt as possible.
  My journey to studying in the field of economics is a roundabout one. Graduating high school, I suppose I was unfortunate insofar as I really didn’t have a field of study that I was excited about going into. In my primary and secondary education I’d enjoyed history classes, but I also enjoyed being able to eat and have a roof over my head, and academia was of little interest to me. So, when I started applying to colleges, I decided to major in my dad’s field: computer science, figuring since he’d been able to provide for our family, I’d probably be able to do the same. I wasn’t going in completely blind, I had taken AP Computer Science and done reasonably well, and I’d dabbled a bit on the side, but it wasn’t really a passion of mine, and I was simply applying for the knowledge that I’d have good job placement opportunities in the future. I was mitigating the risk of future economic hardship with trying to do something I wasn’t really interested in.
When I started applying to schools, I took another opportunity to mitigate financial risk: due to my income bracket I knew I wouldn’t be getting financial aid of any kind, but also would have to be paying a decent sum of my education out of pocket. Therefore, I decided to apply only to public, state universities, most in the Big 10, trying to keep my debt total down, despite having an ACT/GPA combo that probably could’ve given me the pick of where I wanted to go. When my acceptance letters started coming in (along with a few denials), I was pretty much set to attend the University of Minnesota (who had offered some financial incentives) and study computer science. I then had a bit of a crisis of faith, and realized that I couldn’t really envision myself doing CS my whole life. I sat down, looked at what my interests truly were, and where I’d best achieve them, and decided to come to the University of Illinois, undeclared.
My freshman year I spent trying to get into the College of Business’ BPM major, but because of a remarkably poor showing in calculus, I didn’t get in (as a complete aside, I think the ‘one-shot’ policy for the business school is rather silly, I’ve taken the intro accounting classes which would’ve been among the more difficult parts of the BPM major anyways and done fine). This was a point of pure panic for me: I’d made the decision to come to college and sunk major resources into doing so, and wanted to get something out of it (yes, this is the sunk cost fallacy and should rationally be ignored, but I’ll admit to irrational behavior every so often), but none of my plans were coming to fruition. I seriously pondered cutting my losses and going to trade school, since vocations have decent job security and steady pay and would thus have a relatively low income risk. However, I decided to give it one last go and redoubled my efforts into getting a degree in economics, which had very high job placement for graduates, with a high median starting income, and also happened to be a field I had discovered interest in. I retook calculus and did well, I got all the prerequisites out of the way, and was able to declare with confidence at the end of last year.
In that time frame I also did one more thing to ease my financial burden: I took a job as a RA. To put it bluntly: being an RA is not exactly a fun experience. Waking up at 3am to deal with disorderly drunken freshmen is very low on my ranking of optimum bundles I’d have for that time. However, the compensation to hours worked ratio is the highest of any on-campus job, by quite a large amount. With housing and meals taken care of for the two years I’ll work the job, plus a monthly stipend, it’s eliminated the need for me to take on debt to cover my degree, thus assuring a very low-risk experience moving forward. It’s been a strange ride, but I’m now well on my way to buying my accreditation, and I’m looking forward to testing the job market.

Comments

  1. Professor ArvanOctober 20, 2017 at 2:04 PM

    In a couple of weeks we will do the Spence's Job Market Signaling model. If you were in class yesterday, there is no human capital at all produce in college. Instead, high ability students endure college as a way to convince potential employers that they are indeed of high ability. That paper was published in 1973. At the time it was quite an important piece. (Spence ultimately won the Nobel prize.) Alas, it now seems to be conventional wisdom among many undergraduates (though they probably never heard of that paper nor of Spence).

    That said, I would take issue with your characterization in the first paragraph, about the whole of human knowledge being available in your pocket. I agree that the Internet is a truly wonderful library and there is an overabundance of information that can be accessed in a very convenient manner. But information is not the same thing as knowledge and even if you read something, it doesn't mean you've made good sense of what you have read. So, in my opinion, college is a good time to develop and to test your abilities in making sense of the information that is available to you. Further, professors like me are there to model how you might go about doing that.

    Let me illustrate with a little anecdote. Most students when they come to class haven't yet read the textbook on the subject that the class is studying. This I know from my time as an administrator where many instructors complained to me about students being unprepared for class. So, while the option was there for the students to self-teach, the option often wouldn't be exercised. Further, a preference that many students have developed is to first access the course material via the lecture of the professor. But if students develop that habit, is that wonderful library called the Internet really a source of additional knowledge that the students can access after graduation?

    I did briefly show the paper on the role of deliberate practice Making sense of information found online is a skill that needs to develop. In my view, college should be a good place for that happen, though many students miss the opportunity to do just that.

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    Replies
    1. Alan Kreuger Econ 490 Fall 2017October 22, 2017 at 8:54 PM

      I suppose your argument on self-teaching is valid, should the students not be sufficiently self-motivated. A person wholly interested in acquiring knowledge on a topic will seek that knowledge regardless of whether or not it's easily available. Someone who is not, will not. I wonder then if that feeds into my point again: students aren't truly invested in the knowledge they're getting from class-- they're there for a different reason.

      Like I said, the learning component to college seems at this point to be a glorified version of occupational licensing. With grade inflation assuring most people graduate with decent marks, most of what it takes to graduate is passing marks on a few exams and the ability to forward the up-front cost of tuition. Much in the same way a taxi cab driver must complete a specialized drivers test and purchase a medallion in order to operate their vehicle.

      That's not to say that I find attending university a wasteful enterprise: it's just that I think the bulk of the actual marginal human capital gain over not attending university is gained outside of the classroom. Office hours with engaging professors, networking opportunities, exploring new interests and hobbies, building connections with people and professionals. The real gain of a university lies in the fact that it's a high concentration of the best and brightest of the next generation of citizens sharing their ideas with one another, and less what can be taught to them.

      Delete
  2. Susan Athey Econ 490 fall 2017October 21, 2017 at 5:58 AM

    I really enjoyed your perspective on 'buying a degree'. Your assessment that pretty much every lucrative career in our generation expects a degree as a ticket to even get in the interview room I agree with, but I think the college experience can be whatever you make of it. Obviously students who apply themselves more and claim more of the opportunities that a research university like ours has to offer will get more value from the experience.

    There are certain things, especially those not related to strict facts, that can't be learned from the internet. These are things that need to be experienced, and will only be mastered with practice. For example, how to work with others to integrate ideas and resolve conflict. On a more basic level, I find that college acts as training wheels for the real world, teaching students how to manage on their own, providing an illusion of freedom within constraints put in place by the university to protect our safety and guide us in the socially acceptable direction.

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  3. Vilfredo Pareto Econ 490 Fall 2017October 23, 2017 at 4:37 PM

    Your opinion on college education and accreditations is refreshing to read. I often find myself thinking that higher education has become something much different than it used to be. At this point, like you said, it is less about the information gained and more about entering the job market with a degree. It is a sensible choice for someone with money to spare, but more of a hopeful invest for others.

    That being said, I think there is something gained from just going through college life. It has become a place to explore interests and opportunities, and develop as a person in these things before entering a career or the "real world".

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