• Quantifying the Value of a Higher Education Degree

    The often-cited College Board report, Education Pays, presents evidence of the benefits of higher education. It reports that in 2008, workers with a bachelor's degree earned 1.4 times more than their counterparts with only a high school degree ($55,700 versus $33,800). The gap grows even larger with more advanced degrees such as master's or PhD. The report is essentially 50 pages of such data highlighting the stark contrast between the earnings of those with degrees and those without.

    The correlation between education level and salary is clear: the more advanced the degree, the higher the median salary. For the year 2008, high school graduates earned an average of $33,800, those with associate degrees earned an average of $42,000, those with bachelor's degrees earned an average of $55,700, those holding master's degrees earned an average of $67,300, and those with doctorates earned an average of $91,900.

    There are some, such as investment manager Charles Miller, former chairman of the Bush administration's Commission on the Future of Higher Education, who state that the benefits of a college degree derive from the economic and regulatory policies governing the available opportunities, rather than any intrinsic value in the degree itself. This may be so, and one could simply say, "If you don't like the rules, don't play the game." However, a person cannot win at a game if he is not even in it! If that is the way that the job market works, then those that wish to be successful need to play ball.

    Another way of looking at it is that a degree is like a brand name, while the job seeker is a piece of clothing. The shopper might have two identical shirts in his hand, except one is adorned by the famous logo, while the other is generic. Most people are more likely to trust the name-brand, and those who can afford it will buy it. The same goes for employers looking to hire. When looking at two applicants with similar skills, but one has a college degree and one does not, who are they more likely to see as the better potential employee?

    Of course, it's a little more complicated than that. One could try to build a more comprehensive and accurate modeling of the real decisions individuals face regarding higher education. It would have to employ game theory and economics, utility estimates based on statistical data about the happiness of degree holders vs. non-holders and intelligence of the participants, etc. The basic question it would try to answer at the end of the day would be this: Is it worth it? Is it worth the time, money, and effort?

    There is no definite answer to this question. It is an individual decision that must take into account many factors. For example: how much does a degree matter in some particular field of choice? What is the value of the education itself, the job connections made, and the friendships formed? What is the value of the experience?

    These are the questions. The answers won't be the same for everyone. However, the 8-ball tells me more signs point to "yes" than "no," and the increasing pervasiveness and availability of degrees and the extent to which the market is saturated with the higher-educated means that to opt out is a cop-out.

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