Posted by: Louis Lavelle on June 12, 2008
Some new research by Daniel Hamermesh and Stephen Donald suggests that business and other highly paid majors might not be such a smart choice after all. In a nutshell, Hamermesh and Donald found that the high-paid majors are high-paid because they work more, have higher SAT scores, and other factors unrelated to their choice of major. Hamermesh mentioned the research in the NY Times Freakonomics blog and it got picked up by the Chronicle of Higher Education’s News Blog.
The research, which involved several thousand undergraduate alumni of the University of Texas, did hold a bright spot for students choosing poorly-compensated fields, though. Those who supplement their majors with upper level math and science courses can, to some extent, narrow the earnings gap between themselves and the highly paid business and engineering students.
The study didn't look at the impact of choosing an MBA over some other advanced degree, but I wonder if the same phenomenon is at work at the graduate level. Considering what we already know about the large numbers of MBAs who go into consulting and investment banking, the huge number of hours required in those jobs, it seems likely that at least part of the earnings differential that MBAs enjoy might be the result of simply working longer hours or other factors. (Ditto for doctors and lawyers.) If so, it would put the off-the-charts tuition charged by some of the top professional schools in a whole different light, wouldn't it?