The New York Times website had a great little graphic the other day about youth unemployment rates in urban China.  It looked like this: 

Unemployment in Urban China, 20-24 year-olds

For people who see higher education entirely in terms of “work outcomes”, this kind of chart is deeply perplexing.  If higher education doesn’t pay, why do Chinese students keep lining up for university?

There are really two sets of answers.

First, one shouldn’t conclude from this chart that higher education is a bad deal.  Say, for instance,  the pay of a higher education graduate is twice that of a high school graduate.  On a risk-adjusted basis, higher education is still a great bet: staying a high school graduate means a 92% chance of getting $X, moving on to higher education means an 84% chance of getting $2X.  People will still line-up to go because the rewards and the odds remain pretty good.  Either tuition or graduate unemployment would have to go up a lot to dissuade people from attending.

(Governments might legitimately look at numbers like this and question why they’re subsidizing education, but that’s an entirely different question.  And even then, you’d need to take into account the fact that, at a certain level, governments deliberately over-produce graduates because the resulting wage pressure on educated graduates does drive competitiveness.)

Second, and this is a problem a lot of policy wonks have trouble understanding – not all returns are financial returns.  Society accords different levels of respect to different jobs, and people want respect at least as much as they want money.  Most people would pay quite a bit to not have to do manual labour, for instance.  They’d also pay to get a title to which society accords respect.  Hence, in most of the world, there’s a general preference for being an unemployed lawyer rather than an employed plumber (unemployment being a temporary condition and all).

In some cultures, the non-monetary rewards go a lot further. In Confucian societies, higher education is an ethical good; a university diploma is not just a mark of intelligence and hard work, but it denotes moral excellence, as well.  OK, this ethics stuff is really just an echo of class propaganda from two millennia ago (it obviously suited Han-era officials to pretend that they were ethically superior to the rest of Chinese society, as well as richer and more powerful).  But it’s still a powerful pan-East Asian driver of what, in South Korea, they call “Education Fever” – the drive to have as much education as possible, regardless of the cost.

But whether you’re in China or Canada, the demand for higher education is almost never just about jobs.  Smart policymakers would do well to remember that.