Bankrate.com has just published its latest assessment of the financial attractiveness of 162 college majors. After talking to Bankrate’s Adrian Garcia, I like how they do their analysis. It appropriately puts top emphasis on postgraduate earnings of students—70% weight in its rankings. But its also recognizes that job availability varies by major, so it puts a 20% weight on the average unemployment rate of graduates by major, using a Census Bureau definition of unemployment, albeit slightly different from that of the Bureau of Labor Statistics. The last 10% of the rankings is based on the proportion of students going on to get further degrees. The more education it takes to acquire earnings, the costlier it is, so rankings are adjusted downward when a large proportion of majors go on for further education.
What were the top majors? A majority of the top 10 had the word “engineering” in the description, topped by “naval architecture and marine engineering.” All were so-called STEM disciplines. Likewise, a majority of the bottom ten majors had the word “arts,” culminating, in last place, “drama and theater arts.” Most were humanities or fine arts disciplines, such as music, linguistics and comparative literature.
However, to conclude that “If you want to be successful in life, you need to major in a STEM discipline and avoid the classical liberal arts disciplines” could be a serious mistake. Political science and government majors ranked slightly above such STEM majors as mathematics, botany or plant science. History majors ranked 81, about the median of all majors. Economics and accounting were rated above physics, arguably the purest of the scientific disciplines. Psychology was the subject with the second greatest numbers of majors, but ranked a mediocre 140th. The most majors? “Business management and administration,” ranked 67th, below such mainstream arts and science disciplines as economics, history and political science.
The median earnings for top ranked majors tend to be in the $80,000 to $100,000 range, while there are some majors where the median is under $40,000. That gap is larger than the average gap between the earnings of high school and college graduates. Education matters, but the type of education also matters, maybe even more. Moreover, although the Bankrate data do not show this, roughly equally as important as what students study is the question of where they study. According to the College Scorecard of the U.S. Department of Education, the average “salary after attending” is $89,700 at Harvard University, but well under one-third as much ($26,100) at Central State University, an Ohio state school. Part of the reason is that nearly everyone attending Harvard graduates (97%), while at Central State only 23% graduate within six years of entering.
People respond to incentives. The numbers above help explain some trends in higher education. The proportion of students majoring in the fine arts and humanities has generally declined over time as students become aware that, whatever their passion is for, say, theater or music, those majoring in these areas are, figuratively if not literally often starving artists. Meanwhile, engineering, despite its reputation as requiring lots of smarts and hard work, is prospering as a field. Similarly, increasing awareness of the differential outcomes by types of schools has led to an extraordinary flight to quality in higher education—applications are soaring for the top ranked schools, while lower quality institutions are often facing enrollment declines and even threatened financial ruin.
As a product of a liberal arts education with a heavy dose of the humanities as well as social sciences, I agree with those that say “money is not everything.” My own daughter was one of those theater majors which ranked last on the Bankrate list, but she is very happy as a teacher, first of theater then of English at the high school level, not making tons of money but satisfied knowing her work is helping young people get ahead. There are many others like that. But resources are scarce, and public subsidies of higher education ultimately are increasingly scrutinized using cost-benefit criteria. Generally consumers should become more aware of the enormous differences in outcomes that occur within higher education itself. Therefore I hope prospective college students consider the Bankrate study as they choose colleges and majors.