Economic Perspective: The Net Return From College Majors

MARY WALDEN:

“Today’s program looks at the net return of college majors. Mike, we’re used to hearing about differences in pay that college students will earn based on their college major. But now I understand that there’s a new study that combines these pay differences with the costs of the college major. Please share the results of this study.”

MIKE WALDEN:

“Well this study is from the National Bureau of Economic Research, one of the best think tanks doing economic research in the country. And what this does that’s different than previous studies is it recognizes the fact that educating the student in terms of of the cost to the university, to the state, whomever is supporting it, is going to vary depending on the major.”

“For example, in my field of economics, as well as most of the social sciences, we don’t have big labs, we don’t have expensive experiments going on. Whereas if you go into chemistry, physics, a lot of the applied sciences you’re going to have major expenses for lab facilities.”

“So what this study did is it looked at the return that students get in a particular major, and they looked at that net, however, what it cost the university or the state to educate that individual. So we’re looking at a net return here from a public perspective, and they ranked the results by major.”

“At the top of the list, in terms of the highest net returns right now, are business majors, computer science majors and engineering majors. Mid-range, in terms of net benefit, are public administration, the various health fields, as well as education. Lowest, in terms of net return right now, are physical sciences and architecture.”

“Now these are the numbers right now. They could certainly change over time. Also, these are national numbers. The study was unfortunately not able to do this by college or university. I think this will be great information for legislators to look at in terms of where to put their educational money.”

Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in the Department of Agricultural and Resource Economics at North Carolina State University who teaches and writes on personal finance, economic outlook, and public policy.