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Northeastern and Georgetown Universities Provide More Evidence that Degree Choice Matters

May 23rd, 2011 · 4 Comments · Economics

Screen shot 2011-05-23 at 10.29.21 PM.png…and buttresses my opinion that retirement may be best enjoyed later in life.

There’s been a ton of discussion online of late regarding the lack of a decent ROI provided by many four-year degrees. This recently from the New York Times:

Young graduates who majored in education and teaching or engineering were most likely to find a job requiring a college degree, while area studies majors — those who majored in Latin American studies, for example — and humanities majors were least likely to do so. Among all recent education graduates, 71.1 percent were in jobs that required a college degree; of all area studies majors, the share was 44.7 percent.

I’ve written before about how for many high school grads, pursuing an expensive degree in an esoteric less-marketable field may be taking the equivalent of an early retirement which could result long-term in a suboptimal investment of time and money. This implies that the result may be a net reduction in overall happiness. It was not intended to imply that one should not study these topics, or pursue these passions, just that for some, it might be better put off to later in life. And in many cases, may even be free(!).

The genesis of my original post was the Yale study that concluded that starting a career during a recession can “damage salary for decades.”

Compare the following two scenarios:

  • Spend X dollars at an expensive four year university studying Lithuanian folk dancing (2 years of dedicated study).
  • Graduate, discover that there are no jobs in desired field.
  • Get job as admin at accounting firm, pay rate Y get professional and salary enhancements at annual rate Z
  • Retire at age 65 with (fingers crossed) cash in bank, amount Q


  • Spend .5X dollars getting accounting degree at state school.
  • Graduate, discover that there are jobs in pursued field.
  • Get job as accountant pay rate 2Y get professional and salary enhancements at annual rate 1.2Z
  • Retire at age 55 with cash in bank, amount 1.4Q
  • Spend 10 years studying (and performing!) Lithuanian folk dancing and/or hanging with the grandkids.

Spreadsheet attached.

Potential holes in my logic:

  • Lithuanian folk dancing as a red herring. Many academic fields expand the mind in ways that are valuable and life-enhancing and are best not put off. Money isn’t everything.
  • One may be dead at age 50 and any opportunity to pursue desired passion would be tragically lost. (Likely a non-issue as “passions” at age 20 usually prove to be not long-lived. My guess is true academic passions are arrived at later in life.)
  • The personal discount rate may indicate that 2 years now is superior to 10 years later.
  • There are dance jobs available, and will be pursued. Possibly at great financial gain. (this is contraindicated by experience, as the vast majority of people I know with esoteric degrees rapidly abandon (or never pursue) related work.

The only nonsensical argument I’ve heard so far is the magical thinking that rates Y, Z, and Q are at-large the same in either case. If one needs evidence to reinforce my (common-sense?) line of thinking, Georgetown University’s Center on Education and the Workforce has just published a study that makes my case. This study also reinforces the opinion that econ major Ben Stein put forth in his 1996 New York Times editorial.


4 responses so far ↓

  • 1 Steve Roth // May 24, 2011 at 11:12 am

    Let’s say you’re 18 years old and you just adore theater. (I’ve heard there are kids like that.) When you’ve got theater stuff going, you wake up in the morning and can’t wait to get out of bed and get going. When the new Seattle Arts comes out you immediately drop everything and read it cover to cover. You love reading books about it, talking to people about it, going to it, and creating it. When you’re in the zone, you don’t even want to stop for lunch, or dinner for that matter.

    And you know you’ll never make much money at it. You’ll never have a house in Sun Valley or the south of France unless your daddy buys it for you. But you also know that if you work hard you can make a living doing it. If you’re lucky enough to be smart and talented and in the right places at the right times, maybe even a pretty good living — say, $80 or 100K+ as artistic director for a big theater.

    But you figure, “no, I’ll get a degree in business administration instead.” you know you’re gonna *hate* it, have to drag your sorry ass out of bed every morning (through college and perhaps through life), and spend your days (life) doing stuff you really don’t like. But you soldier on via plodding diligence versus enthusiasm, and you end up making $150K. Salt it away and by the time you’re 50 or 60 you’ve got enough money to free up some of your time.

    But by then the fire in your belly is dead (killed, in part, by the very plodding diligence that got you where you are), and the cool opportunities are behind you. Sure, you could get involved in some of amateur community theater, but you’ll never be a player in the big game, never do the really brilliant work.

    Opportunity cost, potential paradise lost.

    Most people navigate some meandering path among these choices, of course. It’s just not clear whether tending toward one end of the spectrum or the other — or how far out in each direction — is gonna yield the best life for any particular person. Life has its whims, the future is uncertain, and it’s not crazy — if there’s something you’re really nuts about — to do it while you’re nuts about it. Maybe you’ll be nuts about something else (like…desktop publishing or something) later on. Hard to say. I sure can’t perceive any higher moral value on either end of the spectrum.

    That’s why I got my “pre-graduate degree” in downhill skiing (at serious dollar-denominated opportunity cost, compared to getting on a lucrative career track) — because I just couldn’t get enough of it. That degree has delivered a huge quantity of joy throughout my life. Still delivering.

    How about the opportunity cost of theater immersion/obsession (or ancient languages, or music performance, or the sociology of ant colonies…)? The payoff could potentially be much greater. There’s a lot of value (utility) in doing what you really like, when you really like it. Because as the Eight Ball says, “The future is unclear.”

  • 2 Steve Broback // Jun 13, 2011 at 12:26 am

    Sadly, 1981 is not 2011.

    For the theatre major you describe here, and the (rare) level of passion you describe, I agree it would be criminal to squelch it. For that 1-10% of the graduating population who have the maturity to understand the course their life *must* take, full steam ahead. Who the hell am I to tell them anything?

    Plus, seems to me like you describe someone who has likely already found themselves in professional productions etc. These are not dilettantes who end up as admins in accounting firms. That is not who I refer to.

    I am merely reinforcing the chorus (supported by reams of data) that tragically, the ROI of college is now questionable and especially (sadly!) so when people don’t go for vocational degrees.

    What’s largely at issue here is the outrageous cost of a degree. When you and I were in college we could afford to pursue our dreams.

    In 2011 the poor kid who thinks they know what they want to do, and chases it (African feminism in the 19th century) has a huge financial albatross hanging around their necks. Even if it’s paid for, the opportunity cost is astonishing.

    Tell you what — should tuitions magically revert back to 1981 levels, I will print my post, eat it, and then delete it off my blog forever.

    If you run the numbers (read my post again) it’s not $150K salted away, it’s a hell of a lot more than that. Just boot up excel. Read the studies.

    I would say that for that dedicated artist who goes for it, I applaud and admire them — truly. I just don’t want to hear any redistributionist dogma from them down the road:

    They got to have their dream. I had to study (ugh.) calculus.

  • 3 Steve Roth // Jun 13, 2011 at 6:45 am

    Not $150K salted away. $150K a year.

    You’re absolutely right on the numbers.

    >(I’ve heard there are kids like that.)

    I wasn’t just referring to my kids…

    You may also be right that only 1-10% of kids have a non-lucrative passion that will turn out to be worth pursuing, lifelong.

    But I’m thinking maybe 50% have interests and predilections, things that come easy for them, but no driving passion or clear career path. Really no idea what they want to do with their lives.

    But if those interests and predilections don’t include business management or software engineering, I’m thinking they probably shouldn’t spend much time exploring those areas. Some maybe — just to see — but…

    ‘What do people with history degrees do?’ The answer is — everything.”

    The question/oddness in that post is truly very curious to me. But it’s the state of things. Odd.

    I’m thinking it really has everything to do with whether your daddy has money. If not, you don’t have much choice: go voc-tech. If yes, take advantage of that, the luxury of spending a few years of college figuring out what lights your fire. (And enjoying yourself/making mistakes on your daddy’s generosity, because he knows you’re going to have to be a goddam responsible adult for far too long, wants to give you that…)

  • 4 Steve Roth // Jun 13, 2011 at 6:58 am

    Oh and on the data: I’m not going to dig it all up, but the reading I’ve been doing suggests (just suggests — I don’t know that there’s a clear trend yet, but definitely strong indications) that we’re seeing a splitting off between the advantages of advanced degree holders vs. those with mere BAs/BSes. Same thing that has happened previously with college vs. no college. More advanced skill sets being offshored and automated. (cf. Adobe)

    Seems to me that, being on the knowledge end of an increasingly technological global economy, a smaller and smaller percentage of Americans have the wherewithal (cognitive, talent, whatever) to thrive, jump over the ever-higher and more distant hurdle into the increasingly separated “successful” group.

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