Chapter 36 — Key Takeaways
Why college costs rose (4 explanations)
- Baumol's cost disease — teaching productivity hasn't risen but teacher wages must compete with productive sectors
- Bennett hypothesis — federal aid may have been partly captured by colleges as higher tuition
- Administrative bloat — admins per student doubled since 1975
- State funding cuts — ~30% decline in per-student funding since 2000
Is college worth it?
On average, yes ($1.2M lifetime earnings premium). But variance is huge. Not finishing (40% drop out) means debt without the credential. The marginal student's return is lower than average.
Housing affordability
Primarily a supply problem: zoning, NIMBYism, missing middle, rising construction costs. Three policies: zoning reform (most effective long-term), rent control (Chapter 7 — problematic), vouchers (efficient but costs money).
The generational gap
Median first-time homebuyer age: 29 (1980) → 36 (2024). Student debt: $1.75T total. Housing-to-income ratio: highest in 50 years. This is structural, not generational laziness.