Veblen Saw It Coming

As we’ve learned over the past several months, a number of super-rich and well-heeled celebrities effectively bribed their children’s way into a handful of “elite” colleges and universities. While a book published in 1899 might not at first seem applicable today, at least two characterizations of the wealthy that Thorstein Veblen offered in his classic analysis, The Theory of the Leisure Class, seem relevant to this unfolding scandal.

First, Veblen (a graduate of Carleton College) suggested that many wealthy folks purchase high-priced items or services simply because they are high priced. Since the wealthy purchaser cannot judge true value on quality, that person assumes that because the price is high there must be corresponding value. Rather than quality determining price, price offers the perception of quality.

In that way, some wealthy parents seek access for their children to high-cost colleges and universities because it relieves the responsibility of actually determining if the institution fits the student’s needs or capabilities. I hazard that few, if any, of the parents caught up in the recent scandal could offer a reasonable explanation of the actual educational quality differences between an “elite” institution and a “not-quite-so-elite” institution.

Moreover, Veblen further suggests that the wealthy often practice “conspicuous consumption.” They quite publicly display their special stature by buying very high-priced items or services. In this case, the people willing to spend huge sums to end run the normal admissions process are telling us, “Look, my child is special because they attend an expensive university, and thus I am a very special person/parent, as well.”

Veblen actually mentions higher education in his assessment of the conduct of the wealthy “leisure” class. Admission to one of these highly selective colleges and universities is more about status than education, especially when it seems clear the students involved would be better served at an institution more attuned to their true academic capabilities. If you have to cheat to get in, it’s probably not for you -- at least from an educational perspective.

And colleges and universities, especially those that label themselves “elite,” adopt a Veblen strategy from their end, as well. One institution involved in the current scandal, the University of Southern California, lists annual tuition at $55,000 per year. I suspect that is in part to send the message that an education there is of especially high quality. But one would be hard-pressed to demonstrate it is eight times better than, say, a crosstown alternative, California State University at Los Angeles, with annual in-state tuition of $6,600 per year. Thus, very high tuition is a marketing advantage rather than a barrier for “conspicuously consuming” parents with the means to easily cover it. And bidding for the opportunity to pay that high tuition fully demonstrates the special status of these parents.

Unless uncovered, these “pay for admission” schemes that benefit institutions through a means of charging for status along with education also benefit parents by feeding a need to believe they appear vicariously “elite” through their children. Perhaps some potential students do benefit from a side-door college or university admission, but others are probably disadvantaged by being forced into an institution that fits neither their needs nor their capabilities.

In the final analysis, Veblen’s assessment here provides at least one way to view the admissions scandal. And since he attended Yale University and spent part of his career at Stanford University, perhaps he had some inkling of things to come 120 years later.