The Income-Level Value of Higher Education

There have been many attacks on higher education lately, some justified but some unjustified.  Some  are questioning whether higher education — both undergraduate and graduate education — is worth it.  Much of these discussions speak about the value of education almost exclusively in terms of the money stream it will produce.  Of course, there are many other values of education beyond this instrumentalist reason.   Knowledge is a good in and of itself.

But if we measure education based on the income stream it will generate, the evidence is that it does correlate strongly with higher income.   A recent Gallup poll reveals statistics about the strong correlation between higher education and income:

More generally, college education is strongly correlated with household income. Nine percent of Americans earning less than $20,000 per year are college graduates; this rises to majorities of adults in all income groups above $100,000. Similarly, few adults in low-income households have postgraduate education, and this rises only into the teens among middle-income adults. But it sharply increases among those earning $100,000 or more, peaking at 49% among those earning between $250,000 and $499,000, and those earning at least half a million.

The educational differences between the nation’s “1%” and “99%” exceed all other demographic as well as political differences seen between these groups in the Gallup data.

This chart summarizes some of the data in the poll:

 

 

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2 Responses

  1. Joey Fishkin says:

    This chart is presented in a somewhat confusing way (since neither rows nor columns add up to 100%) but I take it we’re looking horizontally, at what portion of each income group has a given educational level.

    It would be more interesting to ask the question the other way: for people with particular levels of educational attainment, what is their income? By and large, no level of educational attainment, including postgraduate education, vaults that many people into the top 1%. So it seems to me that if we want to answer the question, “what is the income-level value of higher education,” it is most helpful to ask, “what distribution of incomes does a given educational credential yield?”

    Also, because of Gallup’s timely references to “1%” and “99%,” quoted in the post, I should probably add that, for the reasons Paul Krugman explains here,
    http://krugman.blogs.nytimes.com/2011/11/01/graduates-versus-oligarchs/
    it is important to keep in mind that the increased income inequality since the 1970s has little to do with education levels.

  2. TS says:

    “Of course, there are many other values of education beyond this instrumentalist reason. Knowledge is a good in and of itself.”

    Wonder if we should distinguish between the value of accreditation (i.e. of the student by the bestowal of a degree) versus the value of education. After all, there are many ways to acquire an education, e.g. independent study, apprenticeship, sitting in on classes one is not taking for credit, that do not necessarily entail registration in a formal degree-seeking program. One hopes that student accreditation is a proxy for education, but that may not always be the case.