|By Alan Hall, Excerpted from the February 2011 Socionomist
Originally published under the title, “Back to the School of Hard Knocks? The Education Industry Faces a Multi-Decade Peak”
[Ed: In this prescient study, penned long before the recent spate of articles proclaiming higher education’s potential demise, socionomist Alan Hall forecast a massive shift in society’s positive attitude toward higher education and the eventual collapse of the credit-fueled, government-supported education bubble. Hall’s analysis goes beyond linear economics to reveal what’s really behind the problems in universities today. If your income depends on higher education, do not miss this article.]
Signs of Peak Psychology
Society’s feelings about education shift in concert with social mood. As a 1987 report, “Changing Public Attitudes Toward Higher Education,” said:
In the late 1940s … people had no quarrel with colleges. They wanted more of them, they wanted more young people to go, and they admired professors. This approving public attitude … continued into and throughout the Golden Era of higher education (1955–1970) … . The confidence of the general public in colleges and universities … diminished between 1965 and 1985, a period of time in which … the public and elected officials look[ed] critically at higher education.1
That recent bear-market attitude changed in the subsequent bull market. Public Agenda’s report on education, titled “Great Expectations,” recorded society’s mindset toward higher education in 2000, at a historic social mood peak:
Higher education is perceived as extremely important, and for most people a college education has become the necessary admission ticket to good jobs and a middle-class lifestyle.2
This peaking psychology is manifesting in record popularity of college education, record tuition prices, record debt levels and several other telling indicators as well.
Higher education is more popular in America than ever before. U.S. per-capita college enrollment reached an all-time high in 2008 (the latest data available). … A larger percentage of Americans are in college today than ever before.
The top line in Figure 2 plots U.S. PhDs granted per capita from 1900–2008 (the latest data available), which has also reached a record high. The average U.S. PhD candidate requires 8.2 years to earn a doctorate,3 so we backset the line by eight years to reflect the moment of decision. Doing so reveals a fair correlation with the Dow Jones Industrial Average, our most sensitive indicator of social mood. It is unclear why the 1941 peak in PhDs lagged stocks by an additional three to four years. Nonetheless it is clear that social mood–via waning optimism, economic decline and war–influences the decision to seek or not seek a PhD.
We predict these lines will continue to track the stock world.
Read the remainder of the nine-page article to learn other signs of society’s changing attitude toward education. Discover several developments that Hall predicts will accompany the attitude shift, such as academic versions of the Madoff scandal and a surge of student loan defaults.
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The Socionomist is designed to help readers understand and anticipate waves of social mood. We also present the latest essays in the field of socionomics, the study of social mood; we anticipate that many of the hypotheses will be subjected to scientific testing in future scholarly studies.
The Socionomist is published by Elliott Wave International and the Socionomics Institute, Robert R. Prechter, Jr., president; Mark Almand, director. Staff Writers: Alan Hall, Chuck Thompson, Robert Folsom. Editorial Direction: Dave Allman, Mark Almand, Pete Kendall. Cover Design: Eliot Bern. Production: Chuck Thompson. Proofreader: Ben Hall. Content Coordination: Astra Lureman. We are always interested in guest submissions. Please email manuscripts and proposals to Chuck Thompson via email@example.com.
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Most economists, historians and sociologists presume that events determine society’s mood. But socionomics hypothesizes the opposite: that social mood determines the character of social events. The events of history—such as investment booms and busts, political events, macroeconomic trends and even peace and war—are the products of a naturally occurring pattern of social-mood fluctuation. Such events, therefore, are not randomly distributed, as is commonly believed, but are in fact probabilistically predictable. Socionomics also posits that the stock market is the best available meter of a society’s aggregate mood, that news is irrelevant to social mood, and that financial and economic decision-making are fundamentally different in that financial decisions are motivated by the herding impulse while economic choices are guided by supply and demand. For more information about socionomic theory, see (1) the text, The Wave Principle of Human Social Behavior © 1999, by Robert Prechter; (2) the introductory documentary History's Hidden Engine; (3) the video Toward a New Science of Social Prediction, Prechter’s 2004 speech before the London School of Economics in which he presents evidence to support his socionomic hypothesis; and (4) the Socionomics Institute’s website, www.socionomics.net. At no time will the Socionomics Institute make specific recommendations about a course of action for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended.