College Majors Matter

CATHERINE RAMPELL

Dollars to doughnuts.

We write a lot on Economix about whether college is worth it. In a piece in Investor’s Business Daily, Alex Tabarrok, an economics professor at George Mason University, suggests that Americans are focusing on the wrong question. They shouldn’t be debating whether college in general is “worth it”; they should instead be thinking about whether the specific college degree they’re considering is marketable.

Dollars to doughnuts.

A smaller share of students are choosing majors that are in demand, he writes:

Over the past 25 years the total number of students in college has increased by about 50 percent. But the number of students graduating with degrees in science, technology, engineering and math (the so-called STEM fields) has been flat…

If students aren’t studying science, technology, engineering and math, what are they studying? In 2009 the United States graduated 89,140 students in the visual and performing arts, more than in computer science, math and chemical engineering combined and more than double the number of visual and performing arts graduates in 1985.

Dr. Tabarrok notes STEM majors are more likely to find work and also to find high-paying work. Then he emphasizes that the choice of concentration not only matters for a worker’s earnings but for the entire economy. His conclusion:

Economic growth is not a magic totem to which all else must bow, but it is one of the main reasons we subsidize higher education.

The potential wage gains for college graduates go to the graduates — that’s reason enough for students to pursue a college education. We add subsidies to the mix, however, because we believe education has positive spillover benefits that flow to society. One of the biggest of these benefits is the increase in innovation that highly educated workers bring to the economy.

As a result, an argument can be made for subsidizing students in fields with potentially large spillovers, such as microbiology, chemical engineering, nuclear physics and computer science. There is little justification for subsidizing majors in the visual arts, psychology and journalism.

What do you think of this argument, readers? How would you measure the gains — economic or otherwise — that come from different college majors?

College Is Worth It

We get a lot of questions (complaints, really) about whether college is worth the money, given how much it costs. If our previous reporting on the lower unemployment rates for college grads hasn’t convinced you, maybe this chart from the Federal Reserve Bank of Cleveland will:

Not only do college grads earn significantly more than people whose highest educational attainment is a high school diploma, but that wage premium has been steadily increasing, to almost twice as much in 2010.

Podcast: The Economy, Manufacturing and Commercialized College Life

The economy has been slowing and unemployment in the United States is stuck at 9.1 percent. President Obama has come up with a program that he says will help.

In a speech on Thursday, he offered a $447 billion package of tax cuts and spending programs that received a lukewarm reception from Republicans in Congress. The total of fiscal stimulus items was bigger than expected, but it’s not clear how much of it will be enacted, Floyd Norris says in the new Weekend Business podcast.

The Federal Reserve is contemplating action of its own, deriving inspiration from an old song by Chubby Checker. Among the options being considered to stimulate the economy is a variation on a 1961 Fed program known as Operation Twist. As I write in the Strategies column in Sunday Business, and as we discuss in the podcast, the Fed might twist the composition of its own bond portfolio to lower longer-term interest rates. New research suggests that such an effort might be effective, though its impact could be dwarfed by other influences on financial markets.

In a separate conversation in the podcast, Greg Mankiw, the Harvard economics professor, analyzes the economy’s problems and suggests a long-term solution: stoking the “animal spirits” of business to increase investment spending. This is the focus of his Economic View column in Sunday Business.

And Louis Uchitelle discusses the role of government in manufacturing, the subject of his cover article in Sunday Business. The manufacturing sector is in relative decline in the United States, he says, and isn’t likely to recover without more government help.

The increasing commercialization of college life is the focus of a Sunday Business cover article by Natasha Singer. In a conversation with David Gillen, she says brand marketing on campus has grown in scope and intensity. Along with traditional college colors, student T-shirts have sometimes been emblazoned with corporate logos.

You can find specific segments of the podcast at these junctures: Floyd Norris and Operation Twist (33:31); news summary (25:03); Natasha Singer (22:58); Louis Uchitelle (14:59); Greg Mankiw (7:07); the week ahead (1:43).

As articles discussed in the podcast are published during the weekend, links will be added to this post.

You can download the program by subscribing from The New York Times’s podcast page or directly from iTunes.

The Education Bonus and the Gender Gap

We at Economix have been fairly persistent in demonstrating why college is worth it. Say it together, now: you are overwhelmingly likely to earn more.

A new study from the Census Bureau confirms that the more education you get, the better off you are. A worker with a professional degree will receive median annual earnings nearly four times those of a worker with just a high school diploma, for example, and 87 percent higher than those of workers with bachelor’s degrees. (A post by our colleagues at SchoolBook also looks at the findings.)

But though the study concludes that education is the most important determinant of future earnings, the impact of demographic factors is still significant among those with comparable education levels. And even discounting other considerations, the gender gap is striking.

The Census study, by Tiffany A. Julian and Robert A. Kominski, looked at lifetime earnings for a typical worker from 25 to 64, and came up with estimates measured in 2008 dollars.

Among full-time, year-round workers, white men with professional degrees make nearly 49 percent more in lifetime earnings than white women with a comparable education level. The gender gap is narrower for blacks with professional degrees: black men with professional degrees earn 24 percent more in lifetime earnings than their female counterparts.

That gap is still pronounced at the bachelor’s degree level, where white men working full time and year round earn 40 percent more than white women with the same level of education. Black men with bachelor’s degrees earn 13 percent more than black women who also hold bachelor’s degrees.

Hispanic women appeared at the biggest disadvantage. Among those full-time, year-round workers with professional degrees, white men make 104 percent more than Hispanic women over their working lifetimes.