This graph shows, for the United States from the early 1960s, the average annual monetary-income return to each year of college education. For this time period, these returns reached a low in the mid-1970s – looks like a mere two years before I started college in 1976 – and began rising impressively starting in 1981. These returns have leveled out (with some year-to-year variability, of course) since about 2000.
When an asset – in this case, college-crafted human capital – becomes more productive, it’s neither a surprise nor a ‘market failure’ for the cost of acquiring that asset to rise. (Note that I am not suggesting that all, or even most, of the rise in inflation-adjusted tuition rates for colleges in the U.S. is due to the rising return to collegiate education. I suggest – following Kevin Murphy [and many others] – that this increasing real return is part of the reason for the rise in tuition rates. I have no doubt that other, less savory factors are also in play.)
See also this related 2007 essay by Becker and Murphy .
And one wonders what further information would be revealed if the salaries paid to persons who majored in subjects such as engineering, accounting, finance, economics, and nursing are separated out from the salaries paid to persons who majored in any of the various ‘I’m-Outraged-that-Society-Doesn’t-Fit-My-Idea-of-Perfection Studies.”