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I have a problem with this method: "Payscale draws on its information about alumni salaries. It calculates the expected earnings of a newly minted graduate ove

I have a problem with this method: "Payscale draws on its information about alumni salaries. It calculates the expected earnings of a newly minted graduate over a 30 year career by summing the median incomes of alumni from his or her school who graduated between one and 30 years ago." Yes, I know that college was worth it 30 years ago, and even 15 years ago, and even 10 years ago. That is not the real question. The question is will this continue to be true in the future? Those who are challenging the value of a college degree are in essence arguing "We may be at an inflection point where the value of a college degree will, from this point forward, decrease." You can not prove or disprove the point by pointing out that trend lines from the past, if projected into the future, show that college remains a great investment. That line of reasoning is irrelevant if we are in fact at an inflection point. What is relevant is any argument for or against the idea that we are at an inflection point. Arguments based on trend lines from 30 years ago miss the heart of this subject. The strongest argument to be drawn from this chart is one based on the 5 year trend line: if a college degree was worth a great deal during the Great Recession, then surely that proves the enduring value of a college degree? However, there is a counter argument: what is being measured here is the income premium beyond what someone with a high school degree makes, and the Great Recession wiped out millions of jobs in industries that hired large numbers of people who only had high school degrees (for instance, the construction industry). Again, the question to be answered is are we at an inflection point? When the economy recovers, and jobs in the construction industry have returned, will a college degree still offer the large income premium that it offered in the past?

VLM 13y ago
A somewhat more formal argument is the first and/or second derivatives are probably significantly large negative numbers so numerically integrating the past implies very little about the future. Or if you like an analogy, gravity makes a negative 2nd deriv of height. So if you toss an apple into the air, you can numerically integrate the "foot seconds" underneath the graph of height for the first two seconds. That doesn't mean the number of "foot seconds" area of the graph for time interval 20 seconds to 22 seconds will be identical or even have a linear relationship with "foot seconds" time interval 0 to 2 seconds. (edited to remove the asterisks in foot seconds which makes the HN software somewhat unhappy)
Zimahl 13y ago
Yes, I know that college was worth it 30 years ago, and even 15 years ago. That is not the real question. The question is will this continue to be true in the future? I know this gets brought up all the time on here but HN is not a good indicator of college worth. One of the few (if not the only) disciplines where college might not be necessary is software and this board is primarily software. Even then looking at the difference between the definitions of software developer and a software engineer may make this moot. That line of reasoning is irrelevant if we are in fact at an inflection point. ... Arguments based on trend lines from 30 years ago miss the heart of this subject. Not really. Until there is a real, tangible way for the average individual to get an accepted post-secondary education, we aren't at an inflection point. And other than software development, I personally can't think of another engineering or science profession that could be replaced by self-study and/or experience.
- randomdata 13y ago
  > One of the few (if not the only) disciplines where college might not be necessary I struggle to think of many professions that do require a degree. Doctor, lawyer, and engineer stand out as the obvious ones, but where there is no legal mandate, there is no requirement. 50% of high-level STEM jobs do not even require a degree[1]. [1] http://www.brookings.edu/~/media/research/files/reports/2013/06/10%20stem%20economy%20rothwell/thehiddenstemeconomy610 http://www.brookings.edu/~/media/research/files/reports/2013...
  - Zimahl 13y ago
    One would be hard pressed to learn chemistry or physics without the resources of a university. I don't want a building designed by a self-taught architect or a bridge designed by a self-taught mechanical engineer. I don't want to fly in a plane designed by a self-taught aeronautical engineer. While 50% of STEM jobs don't explicitly require a degree, it would be prohibitively difficult to get a career in those fields without one.
    - randomdata 13y ago
      > it would be prohibitively difficult to get a career in those fields without one. Is that assertion based on more than emotion? If 20% of all jobs require high-level STEM knowledge as stated in the paper, the degree attainment rate is 30%[1], and less than 20% of the degrees awarded in 2010 were STEM-based[2], the numbers do not appear to add up. [1] http://en.wikipedia.org/wiki/Educational_attainment_in_the_United_States http://en.wikipedia.org/wiki/Educational_attainment_in_the_U... [2] http://www.economicmodeling.com/2012/01/11/humanities-or-stem-majors-looking-at-the-most-popular-degrees-for-us-students/ http://www.economicmodeling.com/2012/01/11/humanities-or-ste...
greenyoda 13y ago
"Yes, I know that college was worth it 30 years ago, and even 15 years ago, and even 10 years ago. That is not the real question. The question is will this continue to be true in the future?" I think that's a very good point, considering that (1) the cost of college education has been rising very steeply in recent years and (2) unemployment and underemployment among college grads is currently very high (there are tons of college grads who would be overjoyed if they could only get an unpaid internship). If you really want to treat a college education as an investment, you have to keep in mind the disclaimer that anyone selling an investment has to make: "Past performance is not a guarantee of future results."
nicholas73 13y ago
Another problem with a pure financial projection is that it does not fully consider opportunity cost. The cost/benefit is not simply the difference in earnings, minus tuition, interest, missed earnings and investment on earnings. The real cost is that being in debt limits your options to pursue possibly more lucrative opportunities, or to enjoy your life outside the system. The better term would be liquidity cost. Every one of us will at some point come across a great investment opportunity. Every one of us can have an idea we would like to pursue. But an employee fully loaded with college debt, added with mortgage and kids, can't afford to do anything else but add to a 401k each paycheck. Furthermore, every financial investment should have a healthy margin of error to compensate you for risk. This should be at even higher margins when the more leveraged you are. Things like college and a mortgage are a total leverage of your earnings potential as an employee. Thus the question isn't whether college is merely worth it. The question should be if college is totally a no-brainer as an investment. And it looks like it's not anymore.
- xerophtye 13y ago
  Interesting point. While college gives you a better chance of a regular salary, it pretty much disables you from taking advantage of BIG (albeit risky) opportunities and thus in a way limit your returns. But isn't that how all financial instruments work? You always have to sacrifice a portion of your potential returns to decrease risk. (look up derivative market and hedging your position etc)
sliverstorm 13y ago
Of course it isn't perfect information, and of course things are changing. But they can't give you the numbers from the future because nobody has them! So projecting forwards based on past trends is just one of the ways we can speculate. It can still be useful data, too. Assume we are at an inflection point. Concoct numbers, and tack speculative movement on to the end of the graph. See where that puts you. Yes, it's speculative, but that's all we've got right now.
deleted 13y ago
[deleted]

VLM 13y ago

A somewhat more formal argument is the first and/or second derivatives are probably significantly large negative numbers so numerically integrating the past implies very little about the future. Or if you like an analogy, gravity makes a negative 2nd deriv of height. So if you toss an apple into the air, you can numerically integrate the "foot seconds" underneath the graph of height for the first two seconds. That doesn't mean the number of "foot seconds" area of the graph for time interval 20 seconds to 22 seconds will be identical or even have a linear relationship with "foot seconds" time interval 0 to 2 seconds. (edited to remove the asterisks in foot seconds which makes the HN software somewhat unhappy)

Zimahl 13y ago

Yes, I know that college was worth it 30 years ago, and even 15 years ago. That is not the real question. The question is will this continue to be true in the future? I know this gets brought up all the time on here but HN is not a good indicator of college worth. One of the few (if not the only) disciplines where college might not be necessary is software and this board is primarily software. Even then looking at the difference between the definitions of software developer and a software engineer may make this moot. That line of reasoning is irrelevant if we are in fact at an inflection point. ... Arguments based on trend lines from 30 years ago miss the heart of this subject. Not really. Until there is a real, tangible way for the average individual to get an accepted post-secondary education, we aren't at an inflection point. And other than software development, I personally can't think of another engineering or science profession that could be replaced by self-study and/or experience.

randomdata 13y ago
> One of the few (if not the only) disciplines where college might not be necessary I struggle to think of many professions that do require a degree. Doctor, lawyer, and engineer stand out as the obvious ones, but where there is no legal mandate, there is no requirement. 50% of high-level STEM jobs do not even require a degree[1]. [1] http://www.brookings.edu/~/media/research/files/reports/2013/06/10%20stem%20economy%20rothwell/thehiddenstemeconomy610 http://www.brookings.edu/~/media/research/files/reports/2013...
- Zimahl 13y ago
  One would be hard pressed to learn chemistry or physics without the resources of a university. I don't want a building designed by a self-taught architect or a bridge designed by a self-taught mechanical engineer. I don't want to fly in a plane designed by a self-taught aeronautical engineer. While 50% of STEM jobs don't explicitly require a degree, it would be prohibitively difficult to get a career in those fields without one.
  - randomdata 13y ago
    > it would be prohibitively difficult to get a career in those fields without one. Is that assertion based on more than emotion? If 20% of all jobs require high-level STEM knowledge as stated in the paper, the degree attainment rate is 30%[1], and less than 20% of the degrees awarded in 2010 were STEM-based[2], the numbers do not appear to add up. [1] http://en.wikipedia.org/wiki/Educational_attainment_in_the_United_States http://en.wikipedia.org/wiki/Educational_attainment_in_the_U... [2] http://www.economicmodeling.com/2012/01/11/humanities-or-stem-majors-looking-at-the-most-popular-degrees-for-us-students/ http://www.economicmodeling.com/2012/01/11/humanities-or-ste...

greenyoda 13y ago

"Yes, I know that college was worth it 30 years ago, and even 15 years ago, and even 10 years ago. That is not the real question. The question is will this continue to be true in the future?" I think that's a very good point, considering that (1) the cost of college education has been rising very steeply in recent years and (2) unemployment and underemployment among college grads is currently very high (there are tons of college grads who would be overjoyed if they could only get an unpaid internship). If you really want to treat a college education as an investment, you have to keep in mind the disclaimer that anyone selling an investment has to make: "Past performance is not a guarantee of future results."

nicholas73 13y ago

Another problem with a pure financial projection is that it does not fully consider opportunity cost. The cost/benefit is not simply the difference in earnings, minus tuition, interest, missed earnings and investment on earnings. The real cost is that being in debt limits your options to pursue possibly more lucrative opportunities, or to enjoy your life outside the system. The better term would be liquidity cost. Every one of us will at some point come across a great investment opportunity. Every one of us can have an idea we would like to pursue. But an employee fully loaded with college debt, added with mortgage and kids, can't afford to do anything else but add to a 401k each paycheck. Furthermore, every financial investment should have a healthy margin of error to compensate you for risk. This should be at even higher margins when the more leveraged you are. Things like college and a mortgage are a total leverage of your earnings potential as an employee. Thus the question isn't whether college is merely worth it. The question should be if college is totally a no-brainer as an investment. And it looks like it's not anymore.

xerophtye 13y ago
Interesting point. While college gives you a better chance of a regular salary, it pretty much disables you from taking advantage of BIG (albeit risky) opportunities and thus in a way limit your returns. But isn't that how all financial instruments work? You always have to sacrifice a portion of your potential returns to decrease risk. (look up derivative market and hedging your position etc)

sliverstorm 13y ago

Of course it isn't perfect information, and of course things are changing. But they can't give you the numbers from the future because nobody has them! So projecting forwards based on past trends is just one of the ways we can speculate. It can still be useful data, too. Assume we are at an inflection point. Concoct numbers, and tack speculative movement on to the end of the graph. See where that puts you. Yes, it's speculative, but that's all we've got right now.

deleted 13y ago

[deleted]