Are you thinking about applying to a PhD program? Are you already a doctoral student? PhD is a huge investment of time and money. So make sure you spend 15 minutes of your time reading this blog devoted to PhD program success and survival tips. I'm confident that these tips can save up to 10 years of your life, up to $1,000,000 of your money, and, most importantly, your physical and emotional health.

Thursday, April 16, 2009

Education is an Attractive Industry

Education is the kind of industry Warren Buffet would love to invest in:
  • Everyone thinks he or she needs eduction. It's just a part of our value system. People who don't have education are often looked down upon (unless your are Bill Gates, of course)
  • There are very smart people willing to sacrifice 10 years of their lives just to get a minimum wage job as a lecturer at a university.
  • People are always willing to pay for eduction. Money is often irrelevant to the decision. They will go into all kinds of debt just to get education. Very often, there may not be a strong economic rationale behind this investment - but people want it no matter what. Even if they end up in a situation where they clearly see that their investment hasn't paid off , they may still be happy about it. "Well, at least I'm an educated person!".
  • Many educational products (knowledge/information) are very scalable - there's little or no marginal cost involved in producing these products. For example, if you create an electronic textbook, the cost of burning each additional CD with the textbook on it is not substantial.Yet the education industry manages to charge a lot of money for those products.
  • Education industry players are often able to sustain their competitive advantage for decades, despite the fact that their products can be replicated with ease. For example, one can easily set up a school with a curriculum identical to that of Harvard. Yet it will probably take decades and billions of dollars to steal some of the market share from Harvard. Objectively, quality of education may not be that different - but it is very different in the eyes of the public.
But the irony is that despite being in a very attractive industry, many schools still demand a lot of funding from the government. They just waste the economic potential that they have.

No comments:

Post a Comment