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Why a Liberal Arts Education Makes Economic Sense

by Travis Pantin
Tue, 18 Dec 2007 at 8:58 PM

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On Marginal Revolution, Tyler Cowen makes an economic argument in favor of a liberal arts education, saying those who are able to overcome linguistic, national, and cultural biases are in the best position to win economic gains.

Mr. Cowen recommends students apply themselves to broadening their knowledge and experience base in order to take advantage of the opportunities that present themselves to the liberally educated.

Moreover, he says those with a less professionalized education are better able to focus on developing the faculty of judgment.

"Judgment, judgment, judgment. That's the scarce asset which most people underinvest in, and which yields especially high returns. It can't be outsourced very well either," he writes.

Mr. Cowen also takes issue with the claim that English speakers no longer have any reason to invest in learning foreign languages, as so many other people already speak English. "I would think this raises rather than lowers the return to learning other languages," he writes.

If a liberal arts education is not available, Mr. Cowen offers the following advice: "At the very least, date foreign women (or men)."

Well-being rankings: worthless
There is currently no adequate way of ranking countries in terms of their citizens' well-being, a University of Chicago law professor, Richard Posner, writes. The indices that are used are deeply flawed, he says.

Gross national income per capita does not provide an accurate measurement of well-being because "income is not the only argument in a person's utility function."

Neither does the United Nations Human Development Index, which is a composite of three indices: gross domestic product per capita, life expectancy at birth, and education. America ranks 12th on the U.N.'s list, behind countries such as France, Canada, and Japan.

"I cannot myself see the value of the Human Development Index," Mr. Posner writes. "The combining of the indexes and announcing that the combination offers a ranking of nations by the degree of their 'human' as distinct from narrowly defined 'economic' development … strikes me as dubious, and indeed as senseless."

Mr. Posner also takes issue with the idea of ordered rankings in general.

"From a sensible evaluative standpoint the distance between ranks is more important than the number of ranks that separate two countries," he writes.

For example, he points out that Japan ranks third in terms of life expectancy at birth, whereas America ranks 44th. However, Japanese citizens, who have an average life expectancy of 82 years, live only four years longer than Americans.

Compare that relatively small gap to the difference in per capita income between the third richest country, Switzerland, and the 44th, Palau. Switzerland's income per capita is nearly eight times Palau's — a much greater absolute difference, he writes.

To those Americans who are miffed by their country's relatively low ranking on the U.N. index, Mr. Posner advises: "The Human Development Index is an example of ranking mania that has the United States tightly in its grip, so maybe Americans shouldn't complain about the Index."

The popularity of the higher education rankings published annually by "U.S. News & World Report" provides an excellent example of America's appetite for useless and often arbitrary ranking, he writes.

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