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The (Non-Monetary) Value of a College Degree

The (Non-Monetary) Value of a College Degree
September 13, 2007

With all the recent focus on accountability and "value added" by a college degree, it's still common for a conversation on this topic to come down to individual earning potential. And a new report from the College Board has plenty of data to back up the well-worn claim that college graduates can expect significantly higher wages over their lifetime than their counterparts.

But perhaps its more significant contribution to the dialogue is, as the co-author Sandy Baum puts it, the quantification of non-monetary benefits. To that end, "Education Pays: The Benefits of Higher Education for Individuals and Society," can be seen as part of a growing campaign to frame higher education as not only a private investment but as a public good.

The report, a follow-up to the original 2004 publication that included many of the same indicators, uses data from the Department of Education, the U.S. Census Bureau and surveys by other higher education groups. One of its main assertions (also backed by plenty of data): College graduates are more engaged citizens and make healthier decisions than those who don't earn a diploma. Thus, the report argues, higher education has a high rate of return for society. A more educated work force means greater tax revenue and a stronger democracy.

"A lot of civic benefits are network benefits," said Suzanne Morse, president of the Pew Partnership for Civic Change, who participated in a College Board panel Wednesday on Capitol Hill. "Your ability to communicate well is more important when the rest of your community can communicate well."

As is common for a report that measures civic engagement, "Education Pays" reviews recent data on voting -- in this case from the 2004 presidential election. In every age category, college graduates cast ballots at a higher rate than those who didn't receive a diploma. The trend is particularly pronounced for the 25- to 44-year-old group, in which 76 percent of college graduates voted, compared with 49 percent of high school graduates.

Rates of voluntarism also rise with education level. Forty-three percent of those surveyed with at least a bachelor's degree said they volunteered in 2006, and they reported doing so for a median of 55 hours. Fewer than 20 percent of high school graduates reported volunteering, and the median for them was 52 hours.

However you classify it -- intellectual curiosity, empathy, etc. -- those with the highest degrees were more likely than others to say it's important to understand the opinions of others. The measure, taken in 2004, shows that nearly 8 in 10 adults with advanced degrees and 73 percent with a bachelor's degree said that having such an understanding was "very important." About 65 percent in the high school graduate category agreed with that statement.

At every age and income level, the report shows that there's some correlation between more education and better health. Those with a bachelor's degree or higher most often reported being in "excellent" or "very good health," according to a 2005 survey from the National Center for Health Statistics. That statistic is especially significant for the 65-and-older set, with 70 percent of college graduates falling into the above category vs. only 45 percent of high school graduates.

Graduates of a four-year college are also less likely to smoke than their peers. Of those 25 or above, roughly 25 percent of people whose educations stopped at high school smoke, compared with 10 percent of those who earned a bachelor's degree or higher, according to the National Health Interview Survey. Only five percent of people listed as current smokers who are college graduates did not try to quit within a year of being interviewed for the survey, while 16 percent of high school graduates had not attempted to stop.

Those who finished college also reported being more active. In 2005, for instance, more than 60 percent who were in the 25-34 age range said they exercised "vigorously" at least once a week. That's compared with 31 percent of high school graduates who said the same.

"The data does seem to be evidence that, controlling for other factors, having more education leads to better health decisions," said Michael McPherson, president of the Spencer Foundation, a group that supports research about education. "Part of what's going on in colleges is that students are thinking about themselves in a different way and thinking in terms of long-term goals.

"We tend to think of colleges as endowing particular skills, and this seems to show that students are getting a deeper knowledge," he added. "We should pay attention to this, especially in an era when we pay so much attention to financial benefits."

Still, McPherson agreed that academe needs to do a better job of understanding how, exactly, it helps change behavior. And, as the report makes clear, the correlation-causation issue is important to consider. In other words, it's hard to tell how much of the disparity cited is a result of students completing four years of college or, say, simply a product of their background.

Morse said it's logical to believe that there are factors other than educational attainment at play, such as if a student's parents smoke. Baum, a Skidmore College economist and senior policy analyst at the College Board, said that while the statistics likely "inflate slightly" the importance of college in changing some behaviors, its role as change agent shouldn't be discounted. (She also points out that while the report focuses on education benefits that can be quantified, there are many others that don't fit into charts.)

As previously noted, "Education Pays" summarizes some recent -- and hardly surprising -- data on the financial benefits of earning a colleges degree. It says that after adjusting for inflation, the earnings of male college graduates are no higher now than they were in the early 1970s, and the earnings of female graduates have increased only moderately. But those with less than a college degree have also been a part of that trend.

And the gap between the earning potential of college graduates and high school graduations is only widening, the report notes. For instance, in 2005, a person with a professional degree could expect to make $100,000 a year, compared with less than $32,000 for a high school graduate and $51,000 for a graduate of a four-year college.

Over a lifetime, the expected typical earning of a four-year college graduate is $800,000 more than the expected earning of a high school graduate. If college graduates who also earn higher degrees are included, that lifetime earnings premium rises to more than $1 million. Among 25- to 34-year-olds, the earnings premium for college graduates is highest for Asian and Hispanic males. The premium is higher for black women than for women of other racial and ethnic groups.

The report also notes that the availability of employer-sponsored health benefits and pension plans increases with every level of education attained. More than two-thirds of full-time employees with at least a bachelor's degree have access to pension plans, while only 53 percent of high school graduates have the same access. The level of participation in the available pension plans also increases as education level rises.

Responding to a question about some of the racial and socioeconomic disparities pointed out in the report, Baum said that colleges have done a much better job getting low-income and minority students into college than getting them through. That, the report says, should be a source of public policy concern.

"Our democracy will suffer if the only people who vote are white," Morse said. "We're moving toward a point where the voting pattern isn't reflective of the population in general."

 

 

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