Wednesday, 10 January 2018

Is going to university in Britain worth it?

Dennis A. Ahlburg

In his recent article in The Political Quarterly, Alan Ware claimed that for most students, higher education was not worth the cost. However, this view is inconsistent with the available empirical evidence on the value of higher education. It could in fact lead to students rejecting higher education, which would lead to underinvestment in higher education by society as a whole.

For Ware, higher education is a purely positional competition, that is, the only incentive to acquire higher education is to differentiate yourself from others in the labour market. Accordingly, for this article I focus on the private economic returns to higher education, although not because I believe there is no other value in higher education.

The ‘four myths’ of higher education

Ware claims that the four myths that justify higher education are:

1. There is a ‘need’ for all to be more highly educated.
2. Higher-education qualifications result in higher incomes for those who have them.
3. There is a good fit between the skills needed in the labour market and those acquired in Britain's education system.
4. Educational credentials can facilitate social mobility.

Higher education is still valuable

I agree with Ware that ‘not everyone needs a highly academic form of education’. But this does not lead to the conclusion that no one does.

Higher education does result in higher earnings

Blundell, Dearden and Sianesi (2005) report an average return of twenty-seven per cent for those completing higher education relative to anything else. A recent report on graduate earnings released by the Department for Education also found very substantial earnings advantages for graduates. These and similar findings refute Ware's claims that higher education is not needed and does not result in higher earnings.

The return on education is not the same for everyone

I do agree with Ware that the return on higher education is not the same for everyone, because choice of subject and/or university affect future earnings. Graduates from the top twenty-five per cent of universities earn ten to sixteen per cent more than graduates from the bottom fifty per cent of universities. It is also true that average rates of return differ markedly by subject studied. For example, for men, maths and computing, engineering, business and medicine have returns that are from twenty per cent to thirty-five per cent higher than for arts, sciences, and languages. For women, education, medicine, architecture, maths and business have much higher returns than arts, sciences, and languages.

I disagree with Ware that ‘for many there is no graduate premium’. It is true that for some there is no graduate premium, but there is one for most graduates.

Over-education is a misleading term

Ware claims that too many young people are attending university leading to “over-education”. ‘Over-education’, is not a concept that is easily defined. As the number of graduates has increased, more graduates are taking jobs for which their qualifications are not formally required, but in which they are able to make use of their skills. The skills that are acquired at university—cognitive skills, problem solving skills, communication skills—are more likely to prepare students for jobs for which there is strong demand- non-routine cognitive jobs- than the non-university education seemingly favoured by Ware.

The social mobility gap starts earlier than university

With the expansion of university education, one might have expected social mobility, however it is measured, to have increased. This has not happened but it is not correct to blame universities for this failure.

Over time, the correlation between family income and children's higher education has increased so that the expansion in university education has disproportionately aided children from more affluent families. In 1981 six per cent of children from the poorest families had completed a university degree and twenty per cent of children from the richest twenty per cent of families had done so. By the late 1990s the percentages were nine per cent and forty-six per cent. The gaps by social class were not as large, but were still substantial.

As noted above, a significant portion—but probably not all—of this under-representation stems from poorer performance at primary and secondary school, and inadequate advice in preparing for admission to university.

So, it is unlikely that university education is failing to fuel social mobility. Interventions need to begin early in education so that high ability disadvantaged students are identified and assisted in applying to more selective universities.

Addressing the variability of returns

I reject Ware's claim of ‘too much higher education’. University education is an attractive option for many, if not most, secondary school leavers. However, students must be informed of the variability of returns, and so I agree with Ware that students must have information on earnings by subject and university.

If British students similarly lack the skill to make informed decisions about investments in higher education based on the recent data released, then there is an argument for government to do so. This could perhaps be done by ranking courses and universities by earnings (or value-added) and establishing fee bands commensurate with earnings,

I disagree with Ware that for most graduates there is no return on investment in higher education in Britain. Whilst it is not a guarantee of higher earnings for all graduates, a range of information sources can help students make much more informed decisions about attending university, and thus minimise the ‘social waste’ decried by Ware.

Dennis A. Ahlburg is Distinguished Professor of Economics and former President, Trinity University, San Antonio, Texas, and Visiting Fellow, Oxford Centre for Higher Education Policy Studies, New College, University of Oxford.

This article is adapted from a longer piece in The Political Quarterly journal.

Image © Aimee Rivers

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