Poorer graduates

In a recent post I referred to Australian research that found that university graduates tend to be unhappy people. Now we also have some American research to show that they are not always well paid, either. A recent US census identified ten subject areas whose graduates don’t earn that much. According to this, the worst graduate earners are social workers, followed primary teachers, theologians and musicians.

Interestingly, on the other end of the scale, engineering graduates earn most on average.

But I am now concerned that graduates of the humanities in particular face a future of being both unhappy and poor. Now I am really interested whether these findings would be true in Ireland. It’s a topic I may pursue, with some empirical research of my own, when I shall shortly have more time…

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8 Comments on “Poorer graduates”

  1. kevin denny Says:

    The overwhelming evidence is that graduates earn more other things being equal with hourly wages maybe 30%+. They will also have better health, participate more fully in society and so on. Its true in Ireland and elsewhere. Of course like any average there is variation around it.
    One tends not to look at people in particular sectors or occupations because thats a choice variable i.e. people choose to go into the public sector or theology for particular reasons. They are probably different sort of people & for reasons we don’t understand or observe. So its actually quite tricky to compare like with like.
    So, for example, women tend to be drawn to the public sector because they are more family friendly i.e. there is a benefit other than wages. Also people who are more public spirited, who want to “do good”, may be drawn to the public sector. Though some, as we know, will also “do well”.
    I am not familiar with that Australian research but I wouldn’t feel too sorry for Oz graduates: probably over-indulging in the Vegemite.

    • Vincent Says:

      Is this not a bit wide to be of any real use. Would it not be better to measure those who are at the same or similar level at Leaving Cert. Where one cohort goes to Uni and the other that doesn’t. Then measure incomes.

      • kevin denny Says:

        Vincent, I’m not sure I understand. What one does is collect a big random sample with people at different ages & education levels,income household characteristics. Then one can estimate the effect of different levels of education on income controlling for other characteristics. There are thousands of these studies around the world and a reasonable number for Ireland by people at the ESRI, myself & others.
        The usual theory (Human capital)is that education raises your productivity but Stephen mentions an alternative hypothesis (signalling) which basically says it doesn’t affect your productivity, it just shows employers who the good people are, they were good anyway and thats why they were able to get an education. Its quite hard to know which theory is more relevant. Its related to the issue of grade inflation. But lets not get into that again.

      • Vincent Says:

        If those between say a good pass and 425 points in the leaving were part of a survey. Not those above for their participation at Uni is virtually guaranteed, nor below for their marks indicate the need for strengthening of the foundations.
        Then you might get a real picture of the true value in cash terms.

    • Yes, despite our vegemite loving cousins’ problems, I’ve to agree with Kevin–the still overwhelming evidence is that graduates do better, and countries with more graduates do better, as Barro and Lee’s new paper shows. That said, perhaps one effect this survey is capturing is people who didn’t want to go to college, but felt they had to, to keep up with the Joneses.

      What’s really interesting is playing the story forward a little–what happens when 80% of the 25-34 year old cohort has a BA or equivalent? We know diminishing returns set in to higher and higher levels of educational attainment, so not everyone is going to spend 10 years in college to get that second PhD. But, the signaling function of the degree (“look, I’m a winner, Ferdinand gave me this bit of paper”) will be lost.

      What to do?

  2. Jilly Says:

    I saw that Australian study the other day, thought it a rather odd bit of research (with the important proviso that I’m judging it entirely by media reports!).

    Happiness is a very, very slippery notion, after all. Different people mean different things by the term, and also it’s a transient thing anyway – sometimes you’re happy, sometimes you’re not. In particular, both levels of and concepts of happiness vary across a person’s lifetime. So what life-stage these graduates were at when they were asked the question really matters.

    But ultimately I can’t get away from the fact of the vagueness of the term. I don’t know how I’d answer the question myself, for example. By happy, do we mean contented, or hopeful, or satisfied, or stimulated/engaged? So in the end, is it a question of ask a vague question and get an unreliable answer?

    • kevin denny Says:

      Traditionally economists avoided looking at “happiness” since like yourself we’re a bit suspicious about it. Psychologists tend to be more comfortable taking it at face value. But there has been a big turnaround in the last, maybe, 15 years and the economics of happiness is a big area now. So going on what people say is slippery, there may be cultural differences or gender differences in people’s willingness to say they are happy or not. I suppose the defence is that it means something & it seems to tie in with things we would expect to make you happy like having a good social network.
      People look at the life cycle pattern, I think the claim is thats U shape, it falls till your early 40s (hassle of rearing a family, careers etc) then rises again as you reach your golden years.
      I think the best known result is the Easterlin Hypothesis which basically says that as income rises, when its very low, happiness rises quickly but after a point, when you have basic comforts & security, the effect tails off and the rich are not much happier than the rest of us. Thats a relief. I’d still rather be rich though. đŸ™‚

      • Jilly Says:

        That’s very interesting, Kevin. I had no idea that the economics of happiness is such a big area! I do accept the point that the concept certainly does mean something – it means a great deal indeed, and is worth trying to study. It just seems that the difficulty of trying to get it to stand still long enough to be counted are even greater than the usual such problems with any topic.

        I would certainly accept the idea of a life-cycle pattern too, but again with the proviso that there are a lot of different life-cycles out there in a modern society (many people don’t start having families until their early 40s now, for example, and they often don’t look happy to me!).

        Interesting stuff, anyway. But I’m still a bit suspicious of the bona fides of this particular study.

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