An economic defense of the liberal arts

The humanities are not in a good shape. But learning them as part of a broadly understood liberal arts education can have returns higher than you think.

Liberal arts and especially the humanities seem to be in a bad shape. In some colleges entire fields and departments are deeply politicized so much that they seem to be centers of indoctrination, instead of centers of higher learning. Consequently, the popularity of humanities programs is on the decline, especially in the United States and the United Kingdom. The financial return of some humanities degrees seem to be low and even declining. Writing a post defending the humanities, or more precisely, a liberal arts education, specifically from an economic perspective can seem baffling in view of these developments. It can be all the more baffling because most defenders of the humanities do not like economic arguments very much. Rather, they base their defenses of the humanities on (seemingly) non-economic considerations, and often argue that studying them is “its own reward”. I argue that both detractors who attack the humanities citing low returns and defenders who regard economic arguments as verboten are wrong. Studying in a liberal arts framework can be a crucial part of accumulating and deepening our human capital. It can be a sound basis of further specialization, while its students also benefit from an increased appreciation of life in general, leading them to become not only better workers, but also better consumers. Liberal arts education, however, needs to change and adapt in order to serve once again as a bedrock of learning.

Let us start with the potential economic benefits of studying the liberal arts. Here I would give the floor to the late great Gary Becker, the father of human capital analysis (which allegedly “devalues” the humanities!) himself. Here is an exchange from the interview:

Becker: …What people should look for then as they invest in their human capital is more flexibility. Instead of having human capital that would be particularly useful for one company or even one occupation narrowly defined, you should try to recognize that the future may involve working at another company or in a somewhat different occupation. So look for flexibility.

Interviewer: What kind of education affords such flexibility?

Becker: A liberal arts education. I wrote about this 40 years ago, but I think it’s become even more important today. In an uncertain world, where you don’t know what the economic situation will be like 20 years from now, you want an education based on general principles rather than on specific skills.

The intuition is simple: in a modern, highly uncertain world you often don’t know where and in what capacity you will be working in ten or twenty years, so it is crucial to accumulate a set of knowledge and skills that can be used to acquire further knowledge and skills in many different areas. How can a liberal arts education achieve that? First, it does that by introducing students to many different fields, so they do not rely entirely on knowledge related to one field. Second, when done right, it also does that through emphasizing critical thinking. A contemporary Chicago economist, John List characterizes critical thinking as teaching people to “think slower”; instead of relying on their mental shortcuts and prejudices, they should think about the underlying problem, and try to take into account different perspectives. Perspective taking is something one can learn, among else, by reading great works of literature; other aspects of critical thinking are fostered by studying phyilosophy, economics, or mathematics. These, in my view, should all have their place in a liberal arts curriculum. Recent evidence suggests that studying philosophy, for instance, does in fact promote “slow”, careful thinking. The evidence suggests that philosophy, and possibly other related degrees do not merely signal already existing abilities, rather they build on and expand on those abilities. In other words, they do build human capital.

There is also other evidence indicating that liberal arts education, while lagging behind STEM degrees in the early career years, does perform quite well over the lifetime. This very much fits the model presented above: studying the liberal arts confers less direct practical skills, but may be especially useful in “learning how to learn”, and having a good general education makes it easier to adapt to changing market circumstances.

So far I considered the potential monetary benefits of a liberal arts education. However, investments in human capital also have important non-monetary benefits. These include the positive effect of education on health, general consumer competence, child rearing and marital happiness. Gary Becker and Kevin Murphy pointed out in a paper that general human capital is more useful in consumer and other household activities than very narrowly specialized human capital. Adam Smith was the first who argued, in the Wealth of Nations (on page 734), that

In the progress of the division of labour, the employment…comes to be confined to a few very simple operations, frequently one or two. But the understandings of the greater part of men are necessarily formed by their ordinary employments. The man whose whole life is spent in performing a few simple operations…generally becomes as stupid and ignorant as it is possible for a human creature to become. The torpor of his mind renders him, not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgement concerning many even of the ordinary duties of private life.

In other words, those who do not receive a good general education but only a highly specialized training, are in general not very good managers of their life as managing our life requires knowledge and skills that can be put into use in the many tasks we face in our everyday activities, from reading or watching movies to managing our health. A training in the liberal arts, on the other hand, is by its nature general. Now, it does not follow from this that specialization can or should be sidestepped, after all, specialization is one of the sources of our wealth; a good liberal arts training should, and indeed usually is, followed up by specialized training. The argument is rather that being only a specialist is usually not sufficient for a successful life.

Now, I readily admit that liberal arts education, especially its narrower humanities parts, does not at present fulfill its potential for being the foundation of adult human capital acquisition. At the same time, I am optimistic about its long run prospects. First, there is growing dissatisfaction about the state of liberal arts education especially in Anglo-Saxon countries. Many are tired of the often overtly political curriculums and wish to emphasize learning instead of activism. In short, the tides are turning at top universities against “woke”, and toward learning and free inquiry. Second, today the opportunities to study the humanities are there at almost everyone’s disposal, at least in developed countries. You can, for instance, get into the many conversations, really, about anything, on Interintellect, run by my friend Anna Gát. You can grab any of the “great books” and join one of the discussion forums, on Interintellect and elsewhere. You can listen to all of the greatest music ever produced, practically for free (aside from its opportunity cost, that is). Despite the sad state of some university programs, the opportunities to acquire a true liberal education have never been wider. However, for liberal learning to reach its potential, we need to think of subjects such as economics and even some statistics as part of the liberal arts, given how important these subjects are for personal and professional flourishing in a modern society.

To sum up, even in their current form, the liberal arts contribute to “the wealth of nations”, with wealth being broadly construed. They will contribute even more so once they de-emphasize fashionable political nonsense and put the emphasis again on learning.