Economic duplicity

things are annoying me today that need answering

1) John Kerry's misery index-I am not going to tear down Kerry's data mining statistical nonsense, many other people have. Rather, I got a good laugh when I read that "college tuition" was included as a variable for Kerry's misery index. Kerry is annoyed that college costs have gone up and that people do not have the financial resources to pay for it...well...lets do some simple math.

Median income of households for high school drop outs: $18,000
Median income of households for High school graduates: $28,700
Median income of households for College graduates: $50,000
Average debt burden of undergraduates (1997): $10,500 Adjusted for Inflation = $12,000

Source: National Center for Education Statistics

The economic cost of going to college is the $12,000 dollars in loans owed after graduation (I am assuming grant money, aid, and family help to pick up the rest of the sunk cost tab) PLUS the opportunity cost of engaging the next best opportunity foregone.

In this case 4 years of high school graduate income $28,700*4=$114,800.

So the economic cost of a college education is a grand total of $126,800
What about the benefit

Well lets take people who go into the workforce with only their undergraduate degree (ignore post graduate degrees like MBA's and PhDs). In this case, people will be earning the benefit of the college degree for the 45 years or so they are in the workforce.

So the college grad earns
$50,000 *45 = $2,250,000

The high school grad earns
$28,700*45 = $1,291,500

So Benefit's wise, the college grad earns an extra $958,000 dollars

Net gain is benefits-costs
So
The total social gain for the college grad with all the bad things Kerry says is actually happening is.....
$831,200

Update: THere is more to be said here. When students choose to go to college, the vast majority of them choose to go to a college that provides a decent amount of luxary (good sports program, nice dorms, air conditioned classrooms, etc.) Thus Colleges are spending lots of money on luxary items like a nice gym instead of using the money to reduce tuition. Now colleges exist that provided your simple bair-bones education, but people choose not to go to them. Giving more government funded money to colleges will most likely go towards improving luxary items in order to attract more students than to reducing tuition.

Therefore, there is only one real way to lower the cost of tuition directly for students: provide a tax break (or credit). Now, given the formula above, we must ask whether or not this is actually worth it. For instance, opportunity cost is in play here. The money that would go towards reducing tuition (to ease the burden on students) has alternative and better uses: for instance an anti poverty program.

Jeez, I wonder why Kerry doesn't advocate something like that...could it be that there he is not maximizing his vote potential????