The College Degree as Investment

June 28th, 2011 by Hal Grossman

David Leonhardt of the New York Times may be the best explainer around of economics to us non-economists. His column last Sunday was about two recent studies of the economic returns to a college degree.

One study looked at the B.A. as an investment, and found that it yields an average return of 15% per year. This compares with a 7% return for stocks, 3% for AAA corporate bonds, and less than 1% for real estate.

The other study is more surprising. It found that college graduates in jobs that don’t require a college degree still earn more than their non-college graduate coworkers. Plumbers with a B.A. earn 39% more than other plumbers, firefighters 25%. For hairdressers, the salary “bump” is 69%, and for dental hygienists it’s 76%.

Why should this be? One explanation is that college graduates in non-college jobs are given more demanding assignments and promotions more frequently than their coworkers. Another explanation is that completing college teaches some non-academic skills, like planning and persistence, that are valuable in just about any kind of work.

So if your first job after college is in a field that doesn’t require a B.A., don’t think that you’re a failure — you may be a success in the making.

Leonhardt’s Sunday column is here, and a follow-up blog post, with some interesting charts, is here.

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6 Responses to “The College Degree as Investment”

  1. Destry Vargaz Says:

    The thing is, that your degree is useless if you don’t have a goal for it before you start. Remember that Harvard study that followed students with MBAs? It found that only 3% of the students had written goals going in, but – of those who did have goals, the all made something like 5X more money….

    Food for thought :)

  2. Hal Grossman Says:

    Hi, Destry. I’m not familiar with that study. Do you have a citation to it?

    I think I disagree with you. You can find a goal while you’re in college, or after, and still put the skills you’ve learned, both academic and personal, to good use. If Hunter admitted only students who knew precisely what they wanted to do, the place would be pretty empty!

  3. Alex Says:

    A degree from CUNY is useless in my opinion and experience.

  4. jamesdio | vender libros de segundamano Says:

    I’m not at all agree with that statement. I know many people who are college and / or who have completed their career, and have failed to develop in their jobs simply because they do not have adequate social skills to do so. Do not know how to treat people, do not know what obligations they have, and they can not do so. They have no patience and are a whiners. And these people have come to work oppositional officials. What I find embarrassing, pathetic. I have seen many workers without a university qualification with a lot more “wood” and experience in teamwork and social intercourse that many of these dudes university several races.

  5. Jeff Moreau Says:

    Yes, It is an investment into your overall future, but I do not think that it guarantees you a thing.
    I’ve seen people with degrees and with no job. I’m not talking about the way things have been the last few years either.
    Does a college degree make you more qualified to do a job that the next person is qualified to do? Not necessarily.

  6. Bas James Says:

    When I hire any one I am more interested ihe individuals personality and manner. Many college graduates do not fit the bill.

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