The CAO deadline is approaching here in Ireland. Click here for an entertaining analysis of the returns to a college education in the United States (double click the graphic to enlarge it). Another example of the power of graphical representation.
The CAO deadline is approaching here in Ireland. Click here for an entertaining analysis of the returns to a college education in the United States (double click the graphic to enlarge it). Another example of the power of graphical representation.
12 replies on “The Returns to a College Education”
Very amusing: On the final statistic, the (static) median income statistic is presumably designed to show a gender pay gap. In fact, much of this difference can be accounted for by cohort effects, as women graduates are, on average, younger than male graduates. Younger professionals, of course, earn less.
Many professionals in Ireland will be seriously considering returning to college for post-grad courses or even for new degree courses. It would be interesting to know what courses lead to the best outcomes (good salaries) for which category of returning student. Is there still cash in the economics/banking path? 🙂
“In fact, much of this difference can be accounted for by cohort effects, as women graduates are, on average, younger than male graduates.”
Citation? Also how much younger and could we get a comparison of salaries say 5 years into employment or say at 25 or 26?
Hi
I read an article by George Will in the W. post about a book about this subject. Apparently back a few decades ago IQ tests were used to guage job candidates, but was found to be racially discrimatory by the supreme court.
This naturally led to the use of educational certification as a measure.
But, this then led to a lowering of a return to education as more people used this for self distinction.
I tried to find the article in the post before posting this but couldnt.
Al
75% of posts here will raise a smile.
The literature on returns to human capital tends not to look at the returns to particular fields (business vs humanities vs social science etc) because it is almost impossible to credibly identify the causal effect. The people who go into different fields differ by unobservables and we don’t have experiments (natural or unnatural) that would allow us to get round this.
The standard human capital model assumes that people choose their education to maximize the NPV of the investment. Yet if you look at Leaving Cert students choices now there seems to be excess volatility (like with other investments) as kids are avoiding say Architecture like the plague even though the lifetime earnings probably haven’t changed that much. Maybe they are discounting hyperbolicaly or something.
As another example, the day after Lehmann brothers went belly-up a ton of students in business schools wanted to change their major (out of banking/finance) but largely because thats what the mammy & daddy told them to do. So much for Becker.
Irish students seem to select their third-level ‘majors’ based on their leaving cert points, rather than their interests in the subject matter.
This can’t be healthy, or good for education or the economy.
Several years ago I sat an entrance-level test for an RTE producer training programs. Young RTE PAs were doing last-minute ‘prep’ by quizzing each other on how well they had memorized entries in the IPA diaries. So much of second- and third-level education in Ireland revolves around rote memorizaton. This promotes rigid, at time illogical thinking, the opposite to what the country needs to solve its current problems.
This is a deflationary spiral.
How did banking fare in the thirties?
What careers really took off?
When is the penny going to drop?
After the UK government introduced student loans, they did a study to determine which degrees produced the best return on the time and money spent getting them.
Only 4 degrees produced any return at all:
Medicine
Dentistry
Law
Economics
Science and engineering degrees broke even, ie. they repayed the time and money spent on them, but no more.
Arts degrees did not even break even.
USA stats are hazardous – treat with caution!
I suppose in a monetarist economy much is described as a ‘return on investment’ . Pretty sad, but that’s it! Never mind the quality (of the cloth) just look at the width!
Given the weather that’s in it – what are the probabilities of burst pipes, etc. Fancy a bit of plumbing then? Should be good for a few bob.
@ Pat: That penny you alluded to – its virtual! Will never impact upon a solid surface.
“On the final statistic, the (static) median income statistic is presumably designed to show a gender pay gap. In fact, much of this difference can be accounted for by cohort effects, as women graduates are, on average, younger than male graduates. Younger professionals, of course, earn less.”
Hitting the nail almost on the head here. There could a Simpson’s Paradox type thing at work here; perhaps females are the ones that tend to graduate in social sciences and, if we believe the graphic, end up working at Starbucks.
As with most discussions on pay gaps, the idea is not to prove that a gap exists, but to prove that the gap is unjust and discriminatory.
Pete,
Do you have a reference for that U.K. Govt. study?