Famous colleges are special clubs
When considering college education, one must consider the quality of the “bundle” that is being bought. The package goes beyond just classes and diploma.
College is better understood if seen as a club. A special kind of club that bundles together three things: content, social experience, and badge. Content usually comes from classes, but the social experience and the badge are features more akin to exclusive clubs. The more desirable and selective they are, the better.
Content, the social experience, and the badge
People may think one attends college to learn a profession. They seem also to consider the content taught in classes is the most important part of what college is.
I believe this is a naïve point of view. Content plays only a minor role and college should, instead, be seen as a special club that bundles together content, social experience, and badge.
Clubs are everywhere
A club is any social organization with the following two features:
- Some process to accept or reject incoming candidates
- Space and schedule for its members to spend time together
The trigger for a club to form can be common ancestry, geographical proximity, specific shared interests, etc. There are several examples of clubs in society. The typical workplace is a club. The same can be said of military service, sports clubs, and so on.
Clubs vary both in terms of the criteria for the filtering process and the meaningfulness of the time together. For instance, during war, members of the military club face life-or-death experiences. A good portion of their strong sense of camaraderie stems from having shared such impactful experiences.
Unpacking the college bundle
In the bundle offered by colleges to their members, the social experience are the several opportunities to spend time with other members over the course of 4+ years.
In terms of meaningfulness of time spent together, college ranks very high. It is a rite of passage that marks the beginning of adulthood and brings profound changes to life. It also often involves moving out of home and forging lifelong relationships.
If we had all classes removed, and if there was no formal content left, but if we still kept a similar social experience in those formative years, I believe such club would still be very relevant in society.
The badge is the club’s “acceptance” of someone as a member. The badge is not, as one could expect, the diploma. In fact, for any famous college, the actual filtering step is admissions, not coursework. Take look at the acceptance rates vs. the graduation rates across some of the most famous US institutions. It is clear that being accepted by one of them is the step with the most signaling value.
Successful clubs are desirable and selective
A club is really successful if:
Society perceives the club as highly desirable
The more widespread and deep-seated the recognition is, the better. Successful colleges draw their notable-ness from being associated with famous people (e.g., faculty, alumni, donors) and making progress against some of the hardest problems humankind face (say, conducting scientific research to fight cancer).
The club is highly selective
Imagine if anyone in the street could say that they went to Harvard. The value of the Harvard badge would decrease a lot because it would signal less information. A significant part of a club badge lies in its scarcity, and that’s why clubs try to be exclusive.
Note that because a large pool of high quality candidates is required in the first place, a club can only be highly selective if it is also highly desirable.
The badge is publicly visible and a conduit for status
The key mechanism for increasing how desirable a college is relies on the badge and its remarkable characteristics.
Firstly, the badge is publicly visible. The badge everyone holds is exposed to the world over their entire life (and afterwards). We are trained to know the alma mater of not only our friends, but also from several high-status people. You are certainly aware that Bill Gates and Mark Zuckerberg went to Harvard as undergrads, right?
The badge is also highly conductive. It acts like a sponge for success and status. Take a person who is somehow connected to some school. Any impressive feat of that person is magically absorbed by the badge and transmitted to newer members.
For example, the fact Richard Feynman and many other Nobel Laureates are/were lecturers at Caltech somehow accrues prestige to their newest freshman. Their young students don’t need to do anything themselves (beyond getting admitted).
“Price is what you pay, value is what you get”
If we can agree that famous colleges are elite clubs, then we may get insights about why they can get away with being so expensive. If college provides its members with prestige and access, how much is it worth? Hard to tell exactly, but this hints us on why the riches seem to buy it at (basically) any price.
Well-off people spending money on their kids’ college tuition is not all that bad.
Much worse is people in severe debt to pay for education at poorly regarded institutions. They mistake a diploma for the badge! That misunderstanding makes them significantly overpay for the anemic bundle they get.
Next: The feedback loop that makes universities special