Was your degree really worth it?

by

From The Economist:

Is university worth it? That question once seemed a no-brainer. For decades young adults in rich countries have flocked to higher education. Governments have touted college as a boon for social mobility and economic growth. Yet as fees rise and graduate earnings stagnate, disillusionment is growing. A poll published by the Wall Street Journal on March 31st suggests a crisis of confidence has worsened: 56% of Americans now believe a degree is no longer worth the time and money spent on it.

For an average undergraduate, at least, this is not consistent with the facts. In most places, for most learners, the financial returns to higher education remain extremely healthy. Yet undertaking a degree has become riskier. The rewards for the best performers are increasing, but a troublingly high share of students see negative returns from their studies.

New data sets, such as tax records, are illuminating this dispersion like never before. They can track how much students taking specific courses, at specific institutions, earn in later life. In time that detail will help students avoid the worst pay-offs and seize the best. Choice of subject and timely graduation matter hugely; choice of institution somewhat less so. It could also be useful to governments tempted to crack down on “low-value degrees”.

A boom in graduate earnings began in the 1980s in the rich world. Back then the difference between the salaries of people who gain at least a bachelor’s degree and those who do not—commonly called the “college-wage premium”—began to soar. In the 1970s an American with a university education was earning on average 35% more than a high-school graduate. By 2021 that advantage had risen to 66%.

Recently the wage premium in many countries has either stagnated or begun to fall. And in places that actually charge students for their degrees, costs have gone up (see chart 1). Tuition in England has soared from nothing in the late 1990s to £9,250 ($11,000) a year, the highest in the rich world. In America, the out-of-pocket fee paid by an average bachelor’s-degree student increased from $2,300 a year in the 1970s to some $8,000 in 2018, in real terms, according to Jaison Abel and Richard Deitz at the New York Federal Reserve. (Students at public universities often pay much less; those at private non-profits can pay a lot more.)

Yet the average degree remains valuable. In 2019 Mr Abel and Mr Deitz roughly estimated the annual financial return on the money that a typical American invests in a bachelor’s degree. They conclude that the typical rate of return for a bachelor’s degree is around 14%. That has dropped from a peak of 16% in the early 2000s. But it is still a princely sum. And it is well above the 8-9% that American graduates were recouping in the 1970s, before graduate wages, and tuition fees, began to soar. These calculations include not only fees but also the money individuals might expect to earn if they were working full-time instead.

The average hides a very wide range of outcomes, however. Until recently economists seeking to identify the winners and losers were mostly limited to surveys. The trend now is for governments, such as those of Britain and Norway, to proffer hefty, anonymised databases showing actual earnings for millions of university-goers. That makes it much easier to compare people like-for-like. The disaggregated data reveal that a high share of students graduate with degrees that are not worth their cost.

In England 25% of male graduates and 15% of female ones will take home less money over their careers than peers who do not get a degree, according to the Institute for Fiscal Studies (ifs), a research outfit. America has less comprehensive data but has begun publishing the share of students at thousands of institutions who do not manage to earn more than the average high-school graduate early on. Six years after enrolment, 27% of students at a typical four-year university fail to do so, calculate researchers at Georgetown University in Washington, dc. In the long tail, comprising the worst 30% of America’s two- and four-year institutions, more than half of people who enroll lag this benchmark.

. . . .

Choosing the right subject is crucial to boosting earning power. Negative returns are likeliest for Britons who study creative arts (less than 10% of men make a positive return), social care and agriculture (see chart 2). By far the best-earning degrees in America are in engineering, computer science and business. Negative returns seem especially likely for music and the visual arts. Using America’s available data to guess lifetime earnings by programme is a stretch. But Preston Cooper at freopp, a think-tank, ventures that more than a quarter of bachelor’s-degree programmes in America will lead to negative returns for most enrolled students.

What you study generally matters more than where you do it. That comes with caveats: the worst colleges and universities provide students with little value, whatever they teach. But on average people who enroll in America’s public universities get a better return over their lifetimes than students who go to its more prestigious private non-profit ones, reckon the Georgetown researchers. High fees at the non-profits is one of the reasons why.

Link to the rest at The Economist

PG posted this because the majority of successful authors are college graduates.

As PG has mentioned before, he graduated with an undergraduate major that, in a rational job market, would have been worth very little. Fortunately, PG graduated into a strong job market and got a job for which his undergraduate degree was useless.

The first job lead to a second job for which skills which PG had learned on the first job acted as credentials with more credibility than his undergraduate major, allowing PG to get a second job.

After job #2, PG went to law school. Mrs. PG had come into PG’s life at that time and she soldiered through her own job#2, which she disliked until PG graduated, then she promptly quit.

PG quickly learned that once he had obtained his law degree and passed the bar exam, nobody cared what his undergraduate degree had been.

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28 thoughts on “Was your degree really worth it?”

  1. PG quickly learned that once he had obtained his law degree and passed the bar exam, nobody cared what his undergraduate degree had been.

    …which is not a compliment to the legal profession when it attempts to deal with, well, facts. Let alone patents (this shark’s undergraduate degree matters — he’s fully patent-qualified, because to take the separate patent bar exam and practice patent law before the Patent and Trademark Office one must have at least a math-heavy minor in a core science/engineering curriculum).

    Interestingly, with only one prominent exception (used to be a prof at Stanford, now a prof at Harvard), the leading figures in the copyright bar wildly disproportionately (p > 0.80) have literature/arts degrees† — which explains a lot about how flummoxed they tend to be by Teh Internets. Not to mention the actual financial details of “getting published.”

    So I’d tend to say that undergraduate education tends to predict blind spots more than it does competencies, but that’s for another time.

    † Google’s chief copyright counsel, for example, was a music major. I’ve tried telling him that “move fast and break things” should not include a Bösendorfer, but I’m not sure how successful I was.

    • Explains a lot about Google.
      (Until they bought Motorola they went unarmed into the patent wars. Little wonder MS and Apple both made more money off android than Google.)
      One suspects similar at Apple and the BPHs, re: antitrust.

    • Which is one reason why I wondered why patent law (which requires a science or engineering undergraduate degree plus law school to practice law with the USPTO) is so often lumped together with copyright, trademark, trade dress, etc., law which don’t have a specific undergraduate prerequesite, at least in the United States.

      Patent law and other IP law categories share some similarities in that they each deal with intangible rights, but an English major may do more for you as a copyright attorney than an Electrical Engineering degree.

      • Copyright and patent are lumped together for an obvious reason: The specific constitutional authority for both of them is the same clause (Art. I, § 8, cl. 8).

        Trademark and trade dress are the real outlier. They both originated not as IP, but as consumer-protection laws — trademark law (as we know it; the proto-Italian priviligio variant died off a little over a century ago in favor of systems derived much more closely from English and German ancestors) started out as a criminal statute to protect the esteemed (?) silversmiths of London from having their reputations tarnished† by cheaper knockoffs sold to toffs. And it was a criminal offenses prosecuted by the Crown, not a private lawsuit with Really [Expletive-Deleted] Expensive lawyers on both sides, who were usually the only winners. In short, trademark and trade dress became “property” only during the mid-Victorian era when a private right of action was granted Over There, while Over Here the US authorities determined that it was about an “orderly marketplace” and not some dire insult to the Crown requiring govenment action (interestingly, during the height of P.T. Barnum’s activities…). Which then morphed into “if there’s a private right of action, there must be some property interest.” And then things got complicated.

        † The pun here has been reified in trademark law, entirely without any sense of humor being apparent. Because it is, after all, the common law. And the more you know about the politics, racial and religious bigotry, and outright deception in the acquisition and inheritance of trade marks, the less you’ll respect it (if you have any to start with).

  2. The degrees only got me through the first cut in the applicant pool. After that I got my first real job, and a great job, because the department head doing the hiring was a Marine Corps vet. He saw USMC on my resume. That was all it took. The hiring pool fell down to one.

    • Agreed, E. I know more than a few employers who give extra positive attention to ex-military personell.

  3. I had a Bachelor’s in History (although I always emphasized in interviews that I had considerable experience with quantitative data, statistical analysis, and programming databases). But, it was my minor in Science, along with my computer experience (programming, network administration, databases) that led to most of my jobs.

    • L – The art and science of job interviews from the prospective employee’s standpoint quite often involves some repurposing of skills and talents from past lives.

      During my first job interview for a marketing research position, I emphasized the extensive analysis and technical examination involved in understanding a poem – rhythm, ryme, obvious and hidden information embedded in the words/rhymes/meters/analogies/symbolism and what breaks from the predominant characteristics at some points in a poem might be communicating.

  4. On the OP, one oddity caught my eye: the low return on “agriculture” majors.
    Not sure what they include in those majors or what they cost but on this side of the pond agriculture is a high return field.

    Average salaries in the $70k range. (Australia: $50-60k).

    And it is a diverse field:

    https://www.universities.com/find/us/best/agriculture#:~:text=Undergraduate%20majors%20include%20agribusiness%2C%20agricultural%20communications%20and%20journalism%2C,pre-veterinary%20medicine%2C%20and%20wildlife%20and%20outdoor%20enterprise%20management.

    Feeding the world can and should be rewarding ($$$). 😉

    • Part of that agricultural pattern may relate back to the first rule for becoming a successful farmer:

      Inherit a farm.

      Ditto for a successful rancher.

      Frequently, employees working for the owner of the land were often called “hired hands” instead of something like “hired brains.”

      • Today a large line of credit helps a *lot*.
        Modern agriculture is very capital intensive and even “family farms” are a lot larger than decades past. 1100 Acres is about average.

        And it is evolving rapidly into a high tech industry that relies on satelites, big data, robots, and AI.

        https://www.nytimes.com/2019/09/06/business/farming-technology-agriculture.html

        One description I’ve seen divides old school farming from modern farming as old school works the land and plants in bulk while high tech farming is fine grained, plant by plant, and more akin to industrial “gardening”. The result is lower chemical use, less stress on the land, higher production, and higher quality.

        A further ongoing evolution is starting to segregate orchards and other row crops from the smaller crops, with the latter starting to migrate to Vertical Farms close (or even within) their urban markets.

        And finally, on the bleeding edge (pilot project level) is “Solar Farming” also referred to as agrivoltaic farming or collocated solar agriculture. (Eventually they’ll settle on a buzzword.)
        The idea being that the space between crop rows (and/or) above carries solar panels so the same plot produces both food and energy. One variant uses translucent/adjustable solar panels that regulate the intensity and frequencies of light to best support the plant. It turns out plants don’t need all the frequencies in sunlight and do better with a constant intensity. This approach effectively turns open plots into high tech greenhouses.

        Like everything else around us, today’s farm is changing and becoming unrecognizable.

    • Probably a thing on your side of the pond, in this side not so much (I’m talking of Spain, although the policies come from EU, so probably very similar in the rest of Europe). When you get paid more for killing your cows or uprooting your olive trees than maintaining them, you are doomed, those two just a few examples of what happens here.

  5. Serious question. I had heard that solar panels bleed heavy metals into the ground making it unusable for farming. Is this not true?

    • Fair question.
      This is DISCOVER MAGAZINE’s report on heavy metals in Solar panels:

      https://www.discovermagazine.com/environment/solar-panel-waste-the-dark-side-of-clean-energy

      Note the scale and location of the “concerns”.
      Mishandled waste in third world countries.
      They are talking end-of-life-recycling, not operational leaking. Panel lifespan standard is 25-30 years…but all it means is output has declined 50% at that point.
      Those “concerns” are similar to the ones expressed about all other electronics products.

      So it should be no issue in proper use or down the road, as long as proper disposal/recycling practices are followed.

      Just remember that the primary materials in solar panels are silicon in various forms, aluminum, steel, copper, gold. Other materials like nickel, chromium, zinc, lithium, are common all over but used sparingly. Rare earth minerals are used in very small quantities.(which are far from rare–they are literally all over. What makes them “rare” is finding them unmixed. Refining is old tech but energy intensive so expensive.)

      Individually or in normal use volumes, solar cells are innocuous. What causes “concerns” is the idea that in massive (country-wide) volumes *improper* recycling/disposal can theoretically cause problems. With *improper* meaning “ignores all US/EU regulations ala China”.

      It might be a problem some day. In 2060. In China. If there’s still a state called China in 2060.

      If you want something to worry about with solar panels, fret that manufacturing the panels releases more carbon than the panels will displace over their entire lifetime. There are many good reasons to use Solar panels (I’m a fan) but “saving the environment” isn’t one. The math doesn’t work out.

      But why should the media and activists let facts get in the way of a feel good narrative? Or let a scary anti-tech exageration go to waste?
      That too is part of life in the 21st.

      • BTW, here’s a tabulation of what goes into solar panels and other forms of “clean” energy:

        https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions/mineral-requirements-for-clean-energy-transitions

        Not much difference.

        No mention of the energy cost of manufacture, though.
        Or that NG energy production mostly uses cheap steel and copper and way less energy to manufacture. Life cycle tallies (cost ad emissions) make a diference.

      • I think this is a bit too optimistic in one sense: It neglects the mining-end problems, which are massive and much worse. And largely occurring, at present, in sub-Saharan Africa, so the West just isn’t paying attention.

        It’s not that coltans and related ores are particularly problematic so much as (a) they tend to be in critical habitats and watershed and (b) the nastiest stuff just gets piled up as waste. No recycling at all — not even “China rules” recycling!

        That said, the purported problem with “old panels harming the environment while they’re in place” is largely a mirage.

        • I was trying to keep it simple, within its purported rationale. 😀
          Not only is the mining methodology for the essential minerals despicable, the entire approach is unworkable.

          The amount of (pick your green poison) infrastructure needed to replace hydrocarbons requires a 10-20x increase in the extraction of the strategic materials within a tiny period of time, which has never happened over *centuries*. The deposits may or not exist but the means of extracting, refining, and transporting them (to say nothing of manufacturing at the required scale) can’t be put in place in time to achieve the fantasy of net zero.

          Its all handwaving to mollify the activists and promote the interests of the friends of the party.

          Mind you, wind and solar have a *minor* role to play in select regions but it’s single digit roles nationally. The only tech that stands a chance of approaching greenvana by mid century is nuclear. Specifically, small modular reactors that can be factory built in months, not decades. A rational transition would go to NG for a decade or two while the mini nukes and power distribution system gets phased in but rational isn’t in the gerontocracy playbook.

          Of course, somewhere out there a group of young geniuses might actually deliver on the promise of aneutronic fusion but that is a hail mary.

          Its folly all around as the scientifically illiterate cultists follow their eqully clueless pipers. There’s dozens of fallacies in their propaganda but they’re useful stooges for the politicians and their pals, solely concerned about prosperity in their time. They expect to be dead and buried by the time it all hits the fan.

          The most amusing part is they’re wrong.

          • All we have to do is focus on the copper needed for the proposed windmills. It’s not there. Mining is a long-term investment. It takes years to get a copper mine online and producing. And that doesn’t count all the time in court fighting the people who want green energy and also want to stop mining..

            • And it’s not just the mining: there’s the refining which is energy intensive. And where does the energy for that come from? Coal.

              And, of course, there’s the siting of the refineries and smelters. NIMBY means the polluting businesses get sent to China and North Africa. China doesn’t care about pollution, carbon, soot, or NOx, as long as it brings in foreign money to grow their armies.

              The same with EVs: with the same folks that want to ban IC vehicles being against nuclear, where does the electricity come from in the coastal megacities? Not solar. Not wind.

              Greenvana is a simplistic solution from simple minds.
              The world isn’t simple.

              This is the reality the green cultists willfully ignore:

              https://zeihan.com/wp-content/uploads/2022/04/minerals-for-green-tech-color-01.jpg

              Steel and other mundane, readily available materials excluded. Just the not-so-simple minerals demanded.

              • One of the reasons that I won’t go all-electric for at least another decade is that I know far too much about the problems involved in ensuring that charging systems work out here in earthquake country. I also lived for far too long in an urban oasis surrounded by farmland, 100+km to the next-nearest population center that just might have parts and a mechanic and working charging capability if a tornado ripped through town.†

                It’s not just the tech. It’s the infrastructure to support it at all, let alone in a manner that doesn’t seem insanely expensive to Joe Plumber (as distinct from Karin Trustfundsdottir). And the infrastructure and training of people to maintain it (query: how many people know the voltage of a typical this-year’s-tech-and-on-the-market photovoltaic array suitable for a home… and how to properly and safely make the connections into standard 110+/-5 volt, 60Hz, single-phase residential systems, let alone into a charger for a typical this-year’s-tech-and-on-the-market EV?).

                † Because I have a particularly sick sense of humor, I sort of want my next car to be a smoke-grey hybrid diesel-electric Audi for which I’ll get a personalized license plate of “TYP XIX”. Note, too, that that’s not even an IC engine…

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