Have you ever stopped to think about the value of your education? Most of us are in college not because of a burning passion for a subject or to seek some intellectual pursuit, but merely because we want to make more money.
Making more money is and should be your motivation for attending college. Conventional wisdom says, "If you go to college, you'll make more money." Conventional wisdom is not always right. Going to college might be the worst decision of your life.
I say it might be the worst decision because how you spend your four years dramatically influences the rest of your life. An accounting major will have a very different standard of living than a social work major. Many people do not consider the practical implications of their college choices. Your major will mostly determine the opportunities, career path and overall direction of your life.
Consider the average starting salary of an economics major is about $53,000 a year and the average starting salary of a psychology major is about $30,000. Upon graduation, the average college graduate owes $25,000 in student loans, not counting Parent-PLUS loans. Within a couple of years, the econ grad has earned more than double the psych grad, and the margin widens. Over their lifetime, the econ grad will earn close to a million dollars more than the psych grad.
"College isn't about making money, it's about learning."
True, I suppose. But why pay $17,000 a year to take art classes and not learn any skills required in the real world? The problem with college is that there are too many of what I call "Hobby Majors"; majors that are fun and interesting as a hobby, but only marginal in occupational productivity. Art, music, theater, etc., are all nice and would make superb minors, but majors? They are called starving artists for a reason.
"You should major in something that interests you."
I hear this a lot. It's the conventional wisdom speaking again. My problem with this is that many times what someone finds interesting and what is productive are very different things. How many political science majors are there who chose that major simply because they took POLS 100 and found it interesting? My guess is a lot. Same goes for psychology, sociology and criminal justice. Would you be surprised to know these are the most popular majors across the nation? Would you also be surprised to know that they're among the lowest paying?
Sure, an increase in supply lowers price, but look beyond supply and look at marginal productivity. How much is one of these majors actually worth in the job market? Somewhere around only $30,000 a year.
"There are careers for my major; it is worth something."
I never said a major was worthless, I simply said some majors are not worth that much. Did you attend the job fair last week? Did you notice almost half of the companies there were hiring only accounting majors? And that the other half were mostly hiring business majors? It's no wonder business majors (and professors) make the most money. They're worth the most. Note that engineers make the most starting out, but they spend five to six years for their bachelor's, meaning one to two more years of investment in their human capital. We've gotta compare apples to apples here. The best way to measure the value of a degree is the price that the market places on it. In this case, the price is starting salaries.
But hold on, "money isn't everything."
Again, true. But money is a lot. It seems to me that in every human action the common denominator is money. Every choice is measured in costs, whether it be nominal dollars, opportunity cost or in effects to utility. People make choices they presume to maximize their utility. But people place different discount rates on the impact choices have on their future. In other words, choices have consequences that lay in the future, people in general often do not weigh those consequences in their decision-making process.
In our world of disappearing borders and increasingly global competition, we can't afford to be "well-rounded" when it comes to education. We need a specialization that gives us a competitive advantage in the marketplace, the main source of value creation in our society. Ask yourself if your major gives you advantages over your colleagues, who you'll be competing against for jobs. In the end, you have only yourself to blame for how your life ends up. The information and opportunities for success are out there. Will you take advantage of them?
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