Does university pay?
Will higher tuition fees deter men from going to university? This is the question posed by a new paper by Ian Walker and Yu Zhu on the returns to having a degree.They estimate that, if tuition fees rise to £7000, degrees in the arts, humanities and non-economics social sciences will be bad investments for men. The cost of getting them will exceed the uplift in future earnings. What’s more, at a higher discount rate on future earnings, or in the bottom 25% of graduate earnings, even degrees in science, technology and engineering will have negative pay-offs for men.For most women - except those with lower seconds or worse in the bottom quartile of the wage distribution - degrees will continue to pay.However, the problem here is not the fees themselves; these make only a small difference to the calculations. Instead, it is the underlying wage pay-off to getting a degree. This is larger for women than for men. Women graduates earn an average of 31% an hour more than those with A levels, whilst for men the return is only 19.6%. For men with degrees in the arts, other social sciences and humanities, the wage premium is only 5%.For men, then, humanities degrees should be regarded as a consumption good, not an investment. And with the price of that good about to double, poorer students might be priced out. In this sense, those who fear that universities will become rich boys’ playgrounds - except for the geeks studying economics, law and sciences - might have a point*. Here, though, is a quirk. The reason why degrees are better investments for women is that women without them earn much less than men. This suggests that if universities wish to attract female business - and let’s not kid ourselves they have any higher purpose - they should oppose any attempts to close the gender pay gap.* How far this would change the character of universities is, however, a moot point.