28. Your College Major Matters for Future Earnings

Thesis: I argue that anyone looking for larger returns from their degree, and competitiveness in the labor market, should invest more in math/computer science classes in order to diversify their skills.

College education is appealing to students of all ages, because of the higher rates of return college degrees can provide for an individual relative to the alternative of saving your college money and working immediately. This embodies the tradeoff of consumption now vs consumption later. Data from, ‘The Hamilton Project,’ confirms that individuals with bachelor’s degrees of any major, earned more than associates degrees on average, which earned more than some college and high school graduates. It should be noted that in comparison to all majors analyzed by this study, even the lowest earning major, early childhood education, provided higher lifetime median earnings than that of a high school graduate with no further education. It is obvious that college education can provide people with better returns on their investment, but your college major also makes a huge difference.

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I’d like to point to an article in the economist, which concludes that differences in earnings depends more on the academic major of an individual than the selectivity of a college. The report used comes from PayScale, a “firm that calculates the returns to higher education in American universities. Its authors compare the career earnings of college graduates with the present-day cost of a degree at their alma maters, after taking account of financial aid.”
Although there is a relationship that the more selective a college is, the more an individual should get in return on average, the graph below demonstrates that 20-year average annual returns for graduates on their investment, depend far more on area of study than University admission rate.

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Engineers, computer-scientists, and mathematicians come out at the top, with school admission rates almost being irrelevant in terms of 20-year annualized returns for college students. Business and economics degrees also provide good returns, with a reported 8.7% average return. One can observe that returns on business and economics degrees, do seem to depend more on the rank of a school, with more selective schools providing better returns on average. However, degrees in Science and Humanities are lacking more in their economic returns, noticing a right-downward shift of the mass of data points in the bottom two plots displayed.

Consolidating the information on this blog, I would note that bachelor’s degrees certainly are good to strive for, if you seek getting the most out of your education. This combined with your choice of academic major, I wouldn’t say to go ahead and major in engineering, computer-science, or math, unless you are passionate about these fields of study, but instead to incorporate some of the math skills, and tech savvyness into your array of talents in order to make yourself as marketable as possible on the job market, or even for applying for a PHD in your field of study. Since the beginning of my college journey, I found economics to be quite interesting, with just the right amount of academic challenge to it. However I noticed that good economists, also require extensive knowledge in statistics and math, which is related to having a fairly good amount of knowledge in computers and statistical software. I noticed that I could not simply run away from my fear of math and computers forever, and it made me realize that some of this could partly be due to the fact that the labor market structure is changing, by favoring those with computer and math skills. It may be the case that in the future, added skills with computers and math, may bring one better returns on their degree.

3 thoughts on “28. Your College Major Matters for Future Earnings

  1. njbeck@umich.edu'Nathaniel Beck

    I find it interesting that there is a negative slope in earnings towards the end of a career. Wouldn’t it make sense that earnings would increase with experience? Do you know if this graph is adjusted for inflation.

    1. Israel Diego Post author

      The end of the career slope is probably due to nearing the years of retirement, but yes, the data from the Research claims they have been adjusted for inflation.

  2. Hojoon Kim

    This is really interesting blog post. Can you explain why you wouldn’t recommend to major in engineering, computer science or math? I actually think these three majors have higher rate of returns compared to other majors.

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