Monday, 30 May 2011

Entrepreneurs and university

What is the opportunity cost of university for entrepreneurs? John Tayor writes at the Economcis One blog:
On PBS NewsHour yesterday Peter Thiel argued that the opportunity cost of college may be surprisingly high for many students, and indeed, as widely reported this past week, he raised the opportunity cost for some impressive 20 Under 20 prize-winning entrepreneurs. Economist Richard Vedder was on Peter's side of the argument, and not so surprisingly Wesleyan University President Michael Roth was not.

But the opportunity cost argument is worth taking seriously, and the entrepreneurship example is certainly a good one for the introductory economics course. Ever since Tiger Woods took my Stanford Economics 1 course in 1996, I’ve started my text book and first lecture with the story about how he dropped out of Stanford and joined the pro tour after learning about opportunity cost from me. But in the 7th Edition (out this fall) we are using examples closer to Peter Thiel's (who also was a Stanford student).
It should be noted that along with Tiger Woods entrepreneurs like Mark Zuckerberg, Steve Jobs and Larry Ellison dropped out of university, to work on business opportunities. So not everyone needs to go to university, something that the government should think about, given its seeming obsession with having everyone at university.

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