Are degrees worth it?
The HoS reports:
New Zealand university degrees are the most worthless in the developed world, an international report reveals.
The value of spending years at university has been severely dented by an OECD report that reveals tertiary study adds little to our earning power – less than $1000 a year for women, not much more for men.
New Zealand is at the bottom of the global league tables. The net value of a man’s tertiary education is just $63,000 over his working life, compared with $395,000 in the US. For a Kiwi woman, it’s $38,000 over her working life – that’s less than $1000 a year.
When I read this story, I was suspicious. I recall in the late 1990s looking at income data for graduates and calculating the average boost in income over a working life is around $500,000 (gross, not NPV), and having Ministers use this in 1999 to say that this was a good return on an average $10,000 student loan etc.
Danyl has beaten me to it, and blogged:
The actual report is here. And the thing that they make really clear is that they distinguish between two categories of tertiary education. Type A – university degrees – and type B: (mostly polytechnics). Taken together New Zealand is at the bottom of the table. But if you look at degrees and advanced tertiary study then New Zealand isn’t doing that badly – and the countries that are doing extremely well on that metric are mostly countries with low rates of type A tertiary education. Their degrees are highly valuable because of their scarcity. Almost every statistic in the Herald story refers to non-university level education, but the entire story is about the alleged worthlessness of degree qualifications!
Yes, quite misleading to say degrees are worthless. We have a huge number of students at wananaga, with PTEs and the like who give non degree qualifications.
Tertiary education minister Steven Joyce, who has a zoology degree, said Government figures showing how much people earned four years after study were more positive. But even by that measure, those with a bachelor’s degree earned just 46 per cent more than those with a level-three school qualification.
Just 46%? That’s a huge difference.
Joyce said the Government kept an eye on under-performance at the lower levels of tertiary study. There was no improvement in pay for people who had done NZQA level-three and level-four certificates and diplomas. It was not until they reached a level five or six, or a level-seven degree, that earnings increased.
The point Danyl made.
The story generally had the right data, but it conflated tertiary study and getting a degree in an (unintentionally I am sure) misleading way.
The statement that university degrees are the most worthless is simply wrong. The 40% gain in earnings for a degree amongst 25 to 64 year olds is higher than Denmark, Norway and Sweden.