If you can write a long paper on Greek philosophy that a professor at a good college finds acceptable you have demonstrated you have the capacity to do well in many kinds of entry level high-IQ jobs that don’t require math.
So, is that little bit of signaling worth four years of your life and, usually, a large debt not dischargeable through bankruptcy?
I’m not saying that a liberal-arts BA is not worth it—clearly, it depends. But if you are (1) not independently wealthy; (2) not going to grad school; (3) not very determined to work in the appropriate field (e.g. journalism, book publishing, etc.), then I think you should really consider whether that liberal-arts BA is worth it for you.
Yep. There also was an extended debate on Marginal Revolution about the degree to which a college degree represents skills and to which it is just a pure signal.
And yes, software is eating the world and it just might be the higher education’s turn.
That’s true, but employers are often looking for a skill set in additional to potential. Also, the interviewers are more likely majors from a business field than a philosophy grad and so can more easily evaluate suitability and potential based on a shared set of knowledge.
Most U.S. elite colleges don’t have undergraduate business majors. It’s (falsely in my opinion) considered beneath them. Investment banks would much, much, much rather hire a Harvard philosophy major than a state school business major.
My experience is from Australia where things are a little different yet the same patterns emerge in returns to these majors.
All Australian universities offer undergraduate business majors, from the top to the bottom. Typically a Bachelor of Commerce in which a student will take intro courses on accounting, finance, economics, management etc and select a major for the remainder of credits. Universities with large econ departments often offer a Bachelor of Economics, alternatively or in addition to Commerce which covers more ground in econ but less in other areas. The placement of the econ department within a university also differs which may be in the business school, the social sciences faculty or liberal arts, and the teaching emphasis may be different. I think this demonstrates that economics is a subject which does not easily combine with others under a broader field of study. Good econ students will often take an additional ‘Honours’ year which is essentially masters level micro, macro and some specialised courses and a dissertation. The typical post uni path (for those that don’t immediately go on to further study) is graduate programs in the commercial sector (typically commercial banks, professional services firms, insurance etc) or government (typically treasury, finance, reserve bank etc). Of those that go to government a large proportional end up at banks, insurance, consultancies etc. These programs are typically not open to grads from all majors and some will be open to a very narrow list of majors.
It seems to me that all of the hypotheses JonahSinick detailed are correct. The question is to what extent do each determine the gap in returns. There is a large existing literature on returns to different majors and there are surveys of grads that can help. Maybe an extensive lit review would be prudent before digging much further, if only to become familiar with available data and measurement issues.
True, but why the focus on elite colleges and investment banks? I think if you took out all grads employed by investment banks from all of the categories listed in the tables above you’d see the same pattern.
Non-elite colleges usually have both business and economics majors and students with the goal of maximizing their lifetime earnings often pick business. This might change the stats.
If you can write a long paper on Greek philosophy that a professor at a good college finds acceptable you have demonstrated you have the capacity to do well in many kinds of entry level high-IQ jobs that don’t require math.
So, is that little bit of signaling worth four years of your life and, usually, a large debt not dischargeable through bankruptcy?
I’m not saying that a liberal-arts BA is not worth it—clearly, it depends. But if you are (1) not independently wealthy; (2) not going to grad school; (3) not very determined to work in the appropriate field (e.g. journalism, book publishing, etc.), then I think you should really consider whether that liberal-arts BA is worth it for you.
You might be interested in this article I wrote for Inside Higher Ed about the possible coming collapse of the college market:
http://www.insidehighered.com/views/2011/08/19/miller_essay_on_how_faculty_should_get_out_before_higher_education_collapses#sthash.OTwp4Z6I.dpbs
Yep. There also was an extended debate on Marginal Revolution about the degree to which a college degree represents skills and to which it is just a pure signal.
And yes, software is eating the world and it just might be the higher education’s turn.
That’s true, but employers are often looking for a skill set in additional to potential. Also, the interviewers are more likely majors from a business field than a philosophy grad and so can more easily evaluate suitability and potential based on a shared set of knowledge.
Most U.S. elite colleges don’t have undergraduate business majors. It’s (falsely in my opinion) considered beneath them. Investment banks would much, much, much rather hire a Harvard philosophy major than a state school business major.
My experience is from Australia where things are a little different yet the same patterns emerge in returns to these majors.
All Australian universities offer undergraduate business majors, from the top to the bottom. Typically a Bachelor of Commerce in which a student will take intro courses on accounting, finance, economics, management etc and select a major for the remainder of credits. Universities with large econ departments often offer a Bachelor of Economics, alternatively or in addition to Commerce which covers more ground in econ but less in other areas. The placement of the econ department within a university also differs which may be in the business school, the social sciences faculty or liberal arts, and the teaching emphasis may be different. I think this demonstrates that economics is a subject which does not easily combine with others under a broader field of study. Good econ students will often take an additional ‘Honours’ year which is essentially masters level micro, macro and some specialised courses and a dissertation. The typical post uni path (for those that don’t immediately go on to further study) is graduate programs in the commercial sector (typically commercial banks, professional services firms, insurance etc) or government (typically treasury, finance, reserve bank etc). Of those that go to government a large proportional end up at banks, insurance, consultancies etc. These programs are typically not open to grads from all majors and some will be open to a very narrow list of majors.
It seems to me that all of the hypotheses JonahSinick detailed are correct. The question is to what extent do each determine the gap in returns. There is a large existing literature on returns to different majors and there are surveys of grads that can help. Maybe an extensive lit review would be prudent before digging much further, if only to become familiar with available data and measurement issues.
True, but why the focus on elite colleges and investment banks? I think if you took out all grads employed by investment banks from all of the categories listed in the tables above you’d see the same pattern.
Non-elite colleges usually have both business and economics majors and students with the goal of maximizing their lifetime earnings often pick business. This might change the stats.
Precisely! So focus on the middle of the distribution, not the extremes.