The field of Economics includes several strong assumptions that are called upon occasionally when modeling economic activity. The most severe of these is the assumption of “perfect competition,” an assumption that claims that there is free entry and exit in markets, allowing firms to enter a potentially lucrative area and therefore provide competition to those already acting in that realm, potentially driving down prices and driving up the cost of inputs. The proliferation of “Silly Bands” competitors a few years ago is somewhat of a good example of such entry, but in general, such pure competition does not exist in the real world. Another assumption that is often invoked in creating economic models is that of “perfect capital markets,” the assumption that money will always be available to those who want to borrow to fund a plan that appears will be a successful investment opportunity. I thought of this later assumption a few weeks ago when I heard of a new television program that claims to be offering scholarships to young children based on how correctly their parents predict how they will act under some very contrived situations. It is called “Bet on your Baby.”
When my grieving parents found themselves all but housebound as my mother’s cancer came out of remission last fall following the death of my sister, they found themselves exploring the multitude of channels on the cable TV in their home. As they surfed the stations, they stumbled upon a show called “Bet on your Baby.” In this show, a couple with a young child is separated, with one member going backstage with the child to try to get the toddler to perform some very contrived activity, such as making a soccer goal or dancing using particular moves. Meanwhile, the other parent is on stage and makes a wager as to how successful the first parent will be in getting the child to perform as expected. Correct bets yield a range of payoffs, all called “scholarships”, and may lead to an opportunity to earn even more money, this time significant money that may actually pay for a large portion of a year of college today. At my parents’ request, I watched the show, and I must admit that I thought the kids on it were cute, but in the end, I was appalled to think that this is what we have been reduced to in trying to find a way to pay for college.
I recalled the assumption of “perfect capital markets”, an assumption that would claim that anyone wanting to make an investment in their future by going to college should be able to find someone willing to lend them the money to make that investment, as, upon graduating, they would easily be able to pay back the loan (assuming they find a job, that is.) Although I momentarily thought of selling stock in myself to fund college when I was a teenager, we all know that the real world does not work that way, and as a concession to the real world, alternative ways to pay for college must be found. Apparently, bringing one’s child onto a game show has become the newest option available to parents these days. When I described the show to a fellow mother from our neighborhood, she was also appalled.
And so, I am left with the question of how we can find less disturbing ways for parents to find the money to pay for college. Does anyone have any ideas that don’t involve a toddler mimicking dance moves on national TV?
--- I want to congratulate my students from Ursuline College who will graduate tonight. May your future hold wonderful opportunities! I look forward to seeing you walk across the stage in a few hours. ---