Mackinac: no correlation between college grads and economy

Lou Glazer of Michigan Future is a big fan of higher education. For Glazer, "human capital" as measured by the number of college degrees in a state is the key determinant of economic prosperity. But evidence suggests that a single-minded focus on increasing the proportion of a state's population with college degrees is a dead end for improving the state's economy.

For example, between 2000 and 2008, Georgia experienced substantial growth in the number of residents with college degrees, increasing its proportion of graduates by 13 percent. But it fell 11 places in state per capita personal income rankings, from 26th to 37th place. Indiana's graduate population grew more than all but two other states, but that didn't prevent its income ranking from dropping eight places, from 32nd to 41st.

North Dakota led the country in increasing its graduate population, and it also enjoyed the second best performance among the states in per capita personal income growth. In contrast, the similar economy of Wyoming had the best performance by this measure, but was near the bottom (48th) in growing its graduate base. Large amounts of oil and natural gas exploration were responsible for much of that economic growth in this western state. But even when North Dakota beats every other state in following Glazer's prescription, its economic consequences are indistinguishable from Wyoming, a state that effectively took the opposite prescription.

In fact, as the chart below illustrates, there is no correlation between a state increasing its college graduate base and growing its economy: