The graduate premium

This takes me back. It’s not just about simplicity, but a case of bad science…

Once upon a time a Labour government wanted to convince us that students should pay for their degrees. But this can only really be justified if having a degree is a private good as opposed to a public good (this sort of goes against every government’s own arguments for higher education in that it’s good for the economy as a whole, but that’s another argument). Anyway, the best argument for education being a private good is that graduates earn more than non-graduates and so they personally gain financially.

So Margaret Hodge made a claim that graduates in the UK earn on average £400,000 more than non-graduates over their lifetime (,,840939,00.html).

Of course this story is a bit more complicated. First, this average figure hides differences between male and female graduates (female graduates taking time out for childcare), black and white graduates, rich and poor graduates. Indeed, some graduates (doing social sciences at less prestigious universities) would end up earning less than if they hadn’t gone to university at all.

On top of this simplification, there’s another story about where the figure came from anyway. I looked into this and found that it was a projection from the earnings profile of those in Margaret Hodge’s generation. For these people university was for a very small minority, as compared to almost a majority now. How one can extrapolate from the earnings of the top 5% (by education) to the planned 50% with degrees I’ll never know. As I said here (,,856726,00.html), it seems unlikely that this 50% of current young people will all be in the top 5% of jobs.


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Filed under Statistics and simplicity

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