For a long time, it has been a staple of the college-marketing operation to tell prospective students that they will be far better off if they enroll and earn a degree. Typically, it points to some study on the return on investment they can expect, comparing the earnings of graduates with those of non-grads. The deep problem here is that these ROI data imply a causal connection — if you graduate with one of our degrees, that will cause your earnings to be higher than otherwise. Great numbers of college grads who are struggling to pay off their loans will say that it ain’t necessarily so.

The University of North Carolina system has recently commissioned a study on ROI for its many degrees and in today’s Martin Center article, Davidson economics professor Clark Ross takes a careful look at it.

Ross writes:

A report on the financial returns on a UNC education, commissioned two years ago, was finally released in Nov. 2023. The study was done by the private consulting firm Deloitte, working with the RPK Group and the Burning Glass Institute, and included results from 765 undergraduate and 599 graduate programs on the 16 campuses of the UNC System, offered from 2015 to 2020. The data permit three types of comparisons: earning differentials for graduates across institutions, earning differentials across disciplines, and earning differentials for those studying and then staying to work in the state of North Carolina.

He finds both strengths and weaknesses in the study.

Ross notes that it’s important to examine individual programs and not just the average ROI:

With such variance across programs, a legitimate fear could arise that investment in academic programs will be guided by these results. This can be shortsighted for two reasons. First, as indicated above, the actual returns on a college degree are subject to error and inadequate methodology. To make decisions with such data can lead to poor judgments. Second, there are often interrelationships among programs. As an example, a program in Classical Greek at the undergraduate level may be needed to support a strong graduate Classics program. Assume that the earnings increment from the undergraduate Greek program is low, while the earnings increment from the graduate Classics program is high. Eliminating the undergraduate Greek program places the strong graduate Classics program in jeopardy. Thus, short-sighted decision making could result from simply looking at the incremental earnings of a particular program.

Ross also faults the study for not including various “lifestyle” benefits that tend to be associated with college, but there I demur. Yes, there’s a correlation between better health and college degree holding, but that’s due to the fact that people who have unhealthy lifestyles are not attracted to college. Enrolling is not likely to deter their bad habits.