There is a growing concern about the value of university education. The main complaint is that it is becoming too expensive. However, Michael Ellsberg goes as far as to suggest we invest not in university education but in “the kids who are dropping out of college to start new businesses”.
There are many facets to this debate, but I just want to point out one thing: not all dropouts are created equal. The current people who succeed after dropping out are a highly self-selected bunch. They are people who would probably have done extremely well regardless of whether they had dropped out or not. In other words, they dropped out despite a high expected rate of success, which means their expected returns from dropping out were high.
As you increase the number of people who drop out, you are drawing upon a different pool of people, with different abilities and propensities to take on risk. The dropout rate is around 16% in the UK and and 17% in Australia. For the sake of argument, imagine that we increase the dropout rate to 50% next year and ask those dropouts to start up companies. Do you really think this will greatly increase the number of successful entrepreneurs who end up like Michael Dell, Mark Zuckerberg or Steve Jobs? Having read several biographies of such individuals, my understanding is that success in each case was due to strong personalities, a willingness to take on risks, childhood experiences (or lack thereof), self-motivation, and a variety of other factors. Being a dropout was part of that journey, but wasn’t the underlying reason for success.
The present system is broken; tuition is too high and the quality of education at many universities leaves room for improvement. As someone who studies innovation I believe we should encourage entrepreneurs. But I don’t think the solution is to have more students drop out. What I predict will happen is a change in the price of educational degrees (as suggested by Mike Ryall), but more importantly that educational approaches and instructional styles will change. Whether that change will emerge from existing institutions or from entirely new organizations remains to be seen. Where there is a pressing problem, there arises the opportunity to serve a market need.