Will students learn?

24/01/2013 § 5 Comments

A couple of days ago, the Government launched a new website that allows students to compare potential earnings from different university degrees. The Government said it would be a great source of information for students. Student representatives replied that it didn’t tell them anything new.

A word about methodology — this data was made possible by the new types of data and ways of handling it that have been developed over the last few years. By linking actual earnings data from the tax department with tertiary qualifications data, researchers have been able to determine how much students earn after graduation. This data is gold for research on the impacts of tertiary education.

The website allows you to make pairwise comparisons between different levels of study and degree options. Thus, you can find out that earning a Bachelor’s in a foreign language (that was me) makes you twice as likely to be on a benefit a year after graduation than earning an accountancy degree (that was my brother).

In one sense, the students are right. We already knew this. Many studies have shown which degrees earn the most and the least. I’m currently working with a couple of people on a report on returns to tertiary education. It’s been shown that agriculture or humanities degrees have returns between 40% and 90% below average (Psacharopoulos, 2009; Machin & McNally, 2007).

Lucky me, I have both.

On the other hand, the website is a great tool. It makes the information much more available (have you read Psacharopoulos (2009)?) and dynamic and fun. It also makes it more precise. It isn’t just, oh, yeah, those accountancy students will earn more. Students can see that it’s five, ten, fifteen grand a year every year for the rest of their lives.

Will students change what they study? Will they learn something from the new information? That’s the great thing about this data — we will be able to find out. In five years’ time, we can look back and see whether the composition of degrees in New Zealand has changed.

Also, that research will tell us something else: how much study is preparation for the workforce versus self-improvement or simply consumption. The more students see study as a path to higher earnings, the more the new information should change behaviour. Maybe it won’t change behaviour after all; maybe students already know this stuff; maybe students are already doing what they think best.

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§ 5 Responses to Will students learn?

  • Paul Walker says:

    I can’t help thinking that what matters is life-time earnings net of the full opportunity cost of gaining a qualification. This may well give a different picture of what degree is worth doing.

    • Bill says:

      Yep, absolutely. Let’s hope that MinEdu and IRD keep collecting data so we get a longitudinal dataset that answers that question. In a similar vein, I was wondering if there is a path dependence or conditionality. A liberal arts degree by itself might not amount to much, but might set you up for better post-graduate study.

      • Paul Walker says:

        Couldn’t you look at the jump in earnings between a bachelor’s degree and a masters degree. If a liberal arts degree is a better set up for a masters then the jump should be larger for those students than for those doing other degrees.

  • David says:

    I agree that lifetime earnings should be what is compared. Education is getting expensive, years of earning are missed and support is dropping off (no student allowance now for master’s students — what a dumb policy that is!) all of which significantly erode the pay advantage gained.

    The website doesn’t address the selection problem either — those students that progress to higher levels of education are may be among the most able. They could well have made it to higher earnings without the education.

  • [...] A couple of days ago, the Government launched a new website that allows students to compare potential earnings from different university degrees. The Government said it would be a great source of information for students. Student representatives replied that it didn’t tell them anything new.  [...]

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