Human investments

Last Easter I drove down to Colorado with Darius and Noah, and someone mentioned the idea of investing in human capital: paying a certain amount of money to finance someone’s education and then getting a cut of their future earnings. That, of course, spawned an eight-hour philosophical discussion that ended up stalling out on a debate over whether or not all of the knowledge in the world could ever be recorded, measured, and known (it can’t, Noah) and how that does or does not leave room for some sort of deity. I won’t get into to the connection from one discussion to the other, mostly because I don’t remember it.

I figured the idea of human capital had been discussed before, but never got around to looking into. Today I stumbled on this Boston Globe article that explains how some companies are already offering that service.

One of our worries about the idea is how much information it would require students to bare about themselves: if they smoke; if they have unprotected sex. These things and more would affect how profitable they are — and for how long they are profitable. One of the companies is indeed requiring psychological evaluations as a part the application process.

For us, it ultimately appealed as a scheme to finance students like ours, who otherwise would not have the capital to make their own way to college. Some are worried that investors will ignore these kinds of students, it seems; though it also sounds like the companies offer investments in all of their students at similar rates, where the higher prospect students end up subsidizing the higher risks. We imagined a more open bidding system, in which our students would be a higher risk, but would therefore go for a lower price — and potentially provide a bigger windfall. Then again, we were talking in better economic times, when risky investments didn’t seem like such a bad idea.