"Many of my students, and often unfortunately too their parents, believe that unless they major in business or engineering they are doomed to lives of poverty."
My take: I remember hearing on the radio once for an ad for a local college that people who have college degrees made 42% more than people without. That's such a dubious stat. My theory is there are two reasons why this stat is so:1. There's a self fulfilling prophecy. Companies only higher people with college degrees, so then people with college degrees make more money. Companies don't hire people without college degrees, so then people who want to make more money get college degrees. Ask Bill Gates and Steve Jobs if they needed college degrees.
2. There's a subset of people who don't have college degrees: Ones that are your stereotypical dropout who does nothing all day but collect unemployement, and ones who learned their skills outside of college. See Gates, Bill and Jobs, Steve above. The non college degree stat is all lumped into one grand average.
So the following article talks about theory #1: Certain college majors are a correlated to more money, but does not cause more money. It's really smarts and intelligence.
June 11, 2008, 10:35 am
Which Majors Make the Most?
When we choose a major in college we are to some extent choosing a series of future wage rates. The amount of human capital in which we invest is to some extent linked to our college major — different college majors generate different wages.
Many of my students, and often unfortunately too their parents, believe that unless they major in business or engineering they are doomed to lives of poverty.
I just published some research I’ve done on University of Texas graduates. While differences in earnings by college major are huge, once you account for longer hours worked by business and engineering majors, by the fact that they often have higher SAT scores, and other factors, the differences are much smaller; indeed, over half of the variation in earnings by major disappears.
In other words, the amounts of human capital generated in college by different choices of major are not so different from one another as most people believe. Liberal arts majors don’t do that much worse than business majors; and economics majors do as well as business majors do.
8 comments:
How did they feel about non-engineer scientists??
I wonder if Bill Gates' and/or Steve Job's companies select those with degrees or those without degrees. THEY may not have needed degrees, but the people who work for them probably do.
(note, I have not looked into it, so I have no idea, I was just making an assumption)
So what are the stats that show that not having a degree is going to put you on par with Steve Jobs and Bill Gates. I'm fairly certain that they are the extreme exception rather than the norm of non-degreed employment/success stories (which makes them outliers in the study...) They probably also have a different level of dedication to their own success and sought education on their own in other non formal institution ways. That said, having a degree will put someone who might otherwise be considered sub par or just averge into a more competitive mode. If nothing else, they have demonstrated dedication and perseverence to acheiving a goal. They may also show that they are "trainable" i.e. willing to learn, etc. That is a safer risk to assume when someone has a degree than when they don't...
I think degrees are intended for whenever you work for someone else, knowledge is all that is needed to work for yourself. To me a degree is to prove something to others. Kind of like a certification in a way. If you are going to go out on your own you don't need anything but some boot-strapping skills!
"Many of my students, and often unfortunately too their parents, believe that unless they major in business or engineering they are doomed to lives of poverty."
Yeah, that's so not true... You could also major in medicine or law! =)
I read his paper, not too complex but I don't like his conclusions:
"Rather, over half of the variation in the logarithm of earnings across majors is accounted
for by sorting by ability, high-school performance, parents' economic status, students'
demographic characteristics, and the amount of labor supplied to the market."
So he is saying your major itself only accounts for 1/2 of your increased earnings (which can be a ton!), while the other 1/2 is made up of factors including the fact that some majors are tougher and weed out those with less "human capital". I think there is no doubt that fundamentally your intelligence directly relates to your salary (which I believe includes beings smart about your major choices) but it understates how much your ability to get a degree in a high earning field (like Engineering, Business, etc) is the stamp of approval others will give you for your intelligenece.
I would guess if people read his article they will be offended by the notion that "sorting by ability" means that those with less intelligence end up in lower earning majors. However I take issue with the fact that he appears to have weighted GPA in all majors equally while still noting that they are sorted by ability. So is a 3.0 in all majors an equal measure of "human capital". Even he is arguing no!
No obvious way to correct for this, besides using earnings potential which defeats the purpose of his paper altogether.
FYI - I believe the best ROI for education is still to become a plumber or electrician out of highschool and own your own business doing so (ala "The Millionaire Nextdoor").
I agree with Kathy. The exceptions do not make the rule. They are the outliers for these stats.
My current favorite bumper sticker states:
"The truly educated never graduate". That is (should be) Kathy's motto. ;p
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