Wednesday, December 1, 2010

Why do graduates make more money?

People in the business of giving justifications for making people pay for higher education sometimes say that having a degree makes you more likely to make more money. It’s certainly true that people who went to university tend to make more money, but that gives you a correlation rather than a cause.

Maybe doing a degree really does make you a better worker. You have to learn how to do things like organise your time and think on a more sophisticated level than is demanded at school, and you also usually have to write coherently, in greater or lesser quantities depending on the course. Maybe graduates make more than non-graduates because in acquiring a degree they learn skills which make them a greater asset to an organisation.

Now I’ve got two degrees and I’m doing a third. They’ve definitely made me much more competent as an academic philosopher, but I suspect that I could have increased my competence at anything else just as much if not more by going straight into employment at eighteen. I know a lot of people who’ve been to university, and I don’t think my case is atypical.

As such, I think it more likely that doing a degree doesn’t make you a better worker, but the factors which dispose you to go to university also dispose you to be a good worker. This would be true if, for example, very stupid people were put off school by the focus on academic subjects and tended to leave education at sixteen, thereby filtering themselves out of the pool of university applicants. Now if this is what happens, the higher-pay-for-graduates phenomenon would be expected even if employers only employed on merit, ignoring whether or not people had degrees. The incompetent who acquired degrees would be refused jobs for being incompetent, and the competent who went straight from school to employment would be given jobs because of their competence.

I suppose if this non-causal correlation between competence and degrees was in place, then there would be some efficiency savings to be made for employers if they didn’t assess applicants’ competence directly, but picked people with degrees instead. How viable this strategy would be would depend on how strong the correlation was. It’s hard for me to believe that this would be very good business though, because an employer with this strategy would risk employing a lot of middle-class people who would rather spend three years boozing, lazing around and finding themselves than getting a job. I can’t imagine Lord Sugar taking this risk, so if he employs a lot of people with degrees then it’s because the competent are more likely to go to university. Employers who took the risk wouldn’t be able to compete.

Now if that’s what’s going on, or even if it’s just a significant part of what’s going on, then it’s odd to rest the case for charging for degrees on graduates making more money. If degrees are correlated with but don’t cause competence, then a graduate tax is no more than a fairly clumsy attempt to tax competence. Suppose we found that some diseases were correlated with competence. We could then stop subsidising treatment for these diseases on the grounds that people would be able to use their competence to earn enough to pay for the treatment themselves. If it was a disease which only struck the young we could loan them the money and only make them pay it back when they could afford it, writing it off if it wasn’t paid after thirty years. It’d be redistributive and it wouldn’t hit anyone who couldn’t afford it. Perhaps a study should be done into whether people with glasses really do tend to be more intelligent.

1 comment:

  1. I agree that higher education doesn't make you better at typical jobs (at least not anything like as efficiently as three or four extra years practising those jobs would). It's always mystified me that politicians claim to believe otherwise, blathering on about how vital our universities are to Britain's 'knowledge economy', etc. etc.