Returns to higher education – some doubts and alternative views John Thompson

Returns to higher education – some doubts and alternative views

John Thompson

Student choice

• Whether to study

• What to study

• Where to study

Why go to university?

“Universities transform lives - the typical graduate earns £31,000 a year as against £19,000 a year for a non-graduate. “ Willetts

“on average, graduates tend to earn

substantially more than people with A-levels who did not go to university. Projected over a working lifetime, the difference is something like £100,000” – Directgov

Population

• Students at English state schools and colleges

• At least two A-levels or equivalents

• At key stage 5 in 2008

>= 3 A levels

Int Bac 2 A levels

BTEC Dip

BTEC Cert

0%

20%

40%

60%

80%

HENot HE

1201401601802002202402602803003203403600%

4%

8%

12%

HENot HE

Tariff Points

Student choice

• Whether to study

• What to study

• Where to study

Student choice

• Whether to study

• What to study

• Where to study

Earnings differentials for male and female graduates compared to non-graduates with 2+ A-levels

Men 22%

Women 36%

Women - Men 14%

Derived from data presented in Walker and Zhub (2011), ‘Differences by degree’

Earnings differentials for male and female graduates compared to

ALL non-graduates with 2+ A-levels

Men 43%

Women 15%

Women - Men -28%

Derived from data presented in Walker and Zhub (2011), ‘Differences by degree’

Student choice

• Whether to study

• What to study

• Where to study

Student choice

• Whether to study

• What to study

• Where to study

Mis-selling?

Policy development

Policy development

• How many places should be funded?

• Share paid from the public purse?

• Subject subsidy?

Social returns

• Productivity versus sorting

• Impact on others

• Who is affected?

Social returns

• Productivity versus sorting

• Impact on others

• Who is affected?

Social returns

• Productivity versus sorting

• Impact on others

• Who is affected?

From estimates to policy

The cost of student loans

The catch

“You must agree to repay your loan with the regulations at the time the repayments are due and as they are amended”

What should be done?

Those estimating

• Set out all assumptions• Range estimates covering different scenarios• Detailed descriptions• Data extracts and intermediate datasets

Pundits, politicians, policy makers

When advising prospective students:-• Be circumspect

In policy discussions:-• Do not treat approximate and uncertain

estimates as hard facts