Would Prince William be better off with a law degree?
As the government prepares to make salary data within six months of graduation available to prospective students, new research suggests that it is a poor predictor of lifetime earnings. The imminent royal wedding offers an opportunity to consider the factors that might make a difference to an individual's earnings and career success.
Many careers professionals have expressed concern that a new question on salary in the annual Higher Education Statistics Agency's Destination of Leavers of Higher Education (DLHE) survey, and the publication of the data on websites such as Unistats, will mislead prospective entrants to HE, their parents and advisers. The new research suggests that their fears could be justified.
In a paper presented at the Royal Economic Society conference last week (Differences by Degree: evidence of the net financial rates of return to undergraduate study for England and Wales*), Professor Ian Walker and Yu Zhu of Lancaster University Management School use a subset of the national Labour Forces Survey (respondents in England with at least A Levels) to look at what does make a difference to lifetime earnings.
Impact of subject
Walker and Zhu divide the sample (81,436) into five broad groups ('STEM' - Science, Technology, Engineering and Mathematics graduates; ‘LEM' - Law, Economics and Management graduates; 'OSSAH' - Other Social Sciences, Arts and Humanities graduates; 'Combined' - where more than one subject is studied; and ‘A Level' - non-graduates who achieved at least 2 A Levels, ie who were qualified to go into HE but did not complete a degree) and map their earnings by age. They also examine the impact of gender and degree classification.
Gender profiles
Not unexpectedly, the data shows very different age-earnings profiles for men and women, but it also shows different profiles for each gender depending on the subjects studied. For example, female STEM graduates earn higher salaries than all other females between the ages of 21 and 30, but by the age of 40 have been passed by all but the A Level group. (Could this be partly because of the often-discussed difficulties of combining career and family in some fields in which STEM graduates predominate?)OSSAH graduates initially earn less than all but the A level group but, after the age of 40, overtake STEM, LEM and Combined graduates.
For men the profile looks very different, but is equally interesting. LEM graduates start high and rise steeply. They earn significantly more than all other groups until the age of around 55, when eventually they are caught (perhaps because they tend to begin the process of retiring earlier than other groups?). Male OSSAH graduates at first do better than the other three groups, but by the age of 40 have been overtaken by all apart from the A Level group. Despite the government's promotion of STEM subjects, they do not appear to be such a good choice for men, purely from a salary point of view.
Good degree
Degree classification was also found to be a significant predictor of lifetime earnings. Generally, graduates with a better degree earn more. Indeed, the returns for male OSSAH graduates with a poor degree are negative, ie the A Level group earns more. However, male LEM graduates have very large returns for both ‘good' and ‘bad' degrees.
Tuition fees
Walker and Zhu also predict the impact of higher tuition fees. They conclude that even a large rise will make little difference to the quality of a graduate's investment. For women, all subjects will continue to offer relatively high returns. For men, the subjects which offer high returns (notably LEM) will continue to do so while those with lower returns (notably OSSAH) continue to be less good investments, generally speaking.
The researchers stress that the research only demonstrates the correlation, not the causal effect, of subject of study and that they have been unable to control for institutional differences.
AGCAS CEO Margaret Dane said:
"This research only tells part of the story, especially as many of those surveyed graduated a long time ago and the labour market is constantly evolving. Nevertheless it gives weight to what careers professionals have long been saying - that the six month DLHE, while it certainly has its uses, is a flawed source of information for prospective students.
The reality is so much more complex than can be conveyed by numbers alone. This is particularly so when the figures are used to compare employability and salary prospects across different subjects and institutions in their different regions.
It's vitally important that anyone thinking about higher education has access to a wide range of reliable sources of careers information, alongside high quality advice and guidance - and that they think about what they will enjoy and be good at as well as what they might earn."
Margaret added:
"What strikes me is the evidence that in almost all cases, a degree is shown to be a worthwhile investment. And that working for a good degree pays off too. Ill-informed media coverage risks putting young people off higher education altogether and condemning many of them to a lifetime of lower earnings."
Outlook for the prince
So, although Prince William's degree in Geography (OSSAH) might not at first sight seem to have been such a good choice in terms of earning potential, according to Walker and Zhu, this is certainly offset by his degree classification. He achieved a 2:1.
The Lancaster researchers were, however, unable to analyse how far the prince's background (royal), institution (St Andrews), or extra-curricular activities (eg experience in a mountain rescue team and internship in the City) impacted on his first graduate job (helicopter pilot) or on his long term earnings potential. Neither do they tell us how important salary is to him, what else motivates him or how well his skill set maps against those required for his chosen career. The example does, however, highlight some of the other factors which might be involved in career choice and success and the dangers of making decisions based on first destination statistics alone.
Reference
Differences by Degree: evidence of the net financial rates of return to undergraduate study for England and Wales, Professor Ian Walker and Yu Zhu of Lancaster University Management School, originally published in October 2010.
Tags: salary information dlhe careers research
Created on: 20 April 2011
Last updated: 26 April 2011