AND THIS IS A VERY IMPORTANT POINT: College Pays Off, on Average. Your Results May Vary.

Of course, it’s not exactly like a lottery ticket, because the distribution of the rewards isn’t random. Not every college graduate is entered in the “investment banker” or “Silicon Valley software engineer” draws. The high salaries for those jobs pull up the average earnings of college graduates, which can make a college degree look like a more lucrative bet than it actually is if you’re unlikely to get one of those top-end jobs.

The working paper’s model suggests that the increasing variance, or risk, in the earnings of college graduates means that people who enroll in college are embarking on a search process in which they discover what their likely earnings are. As they realize that they’re more likely to end up in the bottom tier of college graduates, people become more likely to drop out. Others don’t don’t drop out, but graduate and then end up in jobs that don’t require a college diploma.

This model implies that the gains from pushing marginal students into college are likely to be small, for both the students and for society; those students are more likely to drop out or graduate but reap little or no wage premium for their degree.

Of course, this is just one study, and one model. But it raises the question that I asked a few weeks ago: What, exactly, are we getting for all the money we’re spending on college? “Helping students pay for college” sounds like a fine public policy goal. “Helping people to spend years of their lives taking on debt just to find out that they’re unlikely to get a high-paying job” … considerably less so.

That’s why we need to give colleges skin in the game.