A discussion flared up on Facebook based around this article by Michael Ellsberg in the [newspaper: New York Times] whose premise is that college isn’t worth the money, and that we’d be better off encouraging entrepreneurship.

I happen to have been looking recently at the data on this. Let me give you a spoiler: it’s not even close. It’s worth the debt load. Here are the numbers:

* Median income for males with bachelor’s degrees, 2010: $55,038 (does not count those with *more than* a bachelor’s degree, like doctors or lawyers)

* Median for males with associates degrees: $40,918

* Median for males with some college, no degree: $36,082

* Median for males who graduated from high school or got a GED: $30,232

(I could obviously include numbers for women in here, too. I’m leaving them out only for brevity’s sake.)

The mean incomes are similar, but even more striking:

* College degree, 2010, male: $70,567

* High-school degree or equivalent, 2010, male: $36,755

To dramatize this a bit, imagine I grabbed two men at random and asked them their incomes. The probability that the randomly selected college-educated male is earning more than the randomly selected high-school-educated male is about 74%. [1]. I imagine that if I ran a similar simulation — whereby I simulate our two graduates after each has worked for 40 years, and add up their accumulated earnings — that the results would be even more stark.

Fortunately, the Census Bureau has already done that work for me. On a quick scan, I can’t find “work-life earnings” for all males, so I’ll just compare white males. Over the course of his working life, a college-educated white male (specifically one with a bachelor’s degree, not a master’s degree, a professional degree, or a Ph.D.) will have earned about $2.3 million. His high-school-educated white-male partner will have earned $1.2 million.

I repeat: it’s not even close. It’s *so* not even close that I consider it irresponsible in the extreme for Ellsberg to cherry-pick some success stories (Steve Jobs, Bill Gates) and imply that students should strive to be like them, rather than encouraging them to take a rather more sure route to success. Had Ellsberg encouraged students, instead, to skip college and aim to be professional sports players, I hope we’d all be deeply offended. The piece he actually did write is no less offensive.

__P.S. (25 October 2011)__: as various commenters have pointed out, this only shows correlation; it doesn’t show causation. It could well be that the people who have the drive to get a college degree are the same as those who have the drive to earn a lot of income — and that they’d earn a high income even without the college degree. It would be interesting to compare the lifetime earnings of those who got into college but chose not to go with those who got into college and went. I’ll see if I can find any interesting data in this direction later.

[1] — This is just an estimate. It’s based on a simplifying assumption, namely that the probability distribution of incomes is approximately lognormal (i.e., that the logarithm of income follows a Gaussian [bell-shaped] distribution). That assumption, combined with the estimated means and medians from the links above, gives the 74% number.

Thanks to Cosma Shalizi for pointing me to a simple approximation to the true income distribution, and noting how I could go from the estimated means and medians to an estimated probability.

Your analysis is faulty. Garbage-in, garbage-out when it comes to schools or genius-in, genius-out. I.Q. does not change.

Why don’t you compare incomes of people with the same SAT that did or did not graduate from college.

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I agre that college is worth the money, but I don’t think your statistics prove the case. The statistics show that the type of people who go to college make twice as much as the type of people who don’t. What you need to do to prove the case is take people from the same pool and randomly assign them to college or non-college, and see what the outcomes are.

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By this logic, eating a lot of caviar will make you rich.

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You missed the point. A group like

“Median for males who graduated from high school or got a GED”

is

vastlydifferent from a group like“Median for males who graduated from high school or got a GED and

would havegotten a college degree but chose the entrepreneural route instead”Encouraging people to go entrepreneurial instead of college puts people in the second group, not the first. The median in the first group is lower because this group contains all the people that lacked the talent or ambition to go to college in the first place. This talent and ambition drives up median income. The original article argues that this talent and ambition will drive up income more if you skip college and go entrepreneural instead. It does not apply to the first group and thus to counterpoint the original article you would have to compare with groups like the second.

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You did not address whether the increase in income is proportionally greater than the increase in debt load. It probably depends on what one studies. A case could be made that a degree in, for instance, English with a minor in philosophy is not a profit-making venture.

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Yea yea yea yea yea. A lot of studies don’t account for ability bias, and hence merely show correlations. But there are other methods used to get around this problem. Basic estimates show that each year of schooling increases income by about 13 percent for whites, and about 15 percent for blacks (Goldberg & Smith 2008). Using instrumental variables, economists have shown that the real beta is naturally lower, but still high (around 10 percent for whites in some studies, 8 percent in others). Still, education is the best investment one can make.

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