Traditionally, universities have selected the smartest applicants. But could this change, so that they select the stupidest, in one sense at least?
This is the thought raised by a new paper by Arnaud Chevalier. He points out that there is enormous variation amongst graduate earnings. For example, among those who graduated in economics in 2003, the 10% of highest earners three years later earned almost 80% more than the lowest 10 per cent of earners. The differences were even bigger for law, IT, maths or accounting graduates. And in almost all subjects, the differences exceeded 60%.
You might think these differences are the inevitable result of differences in graduates’ ability. But these control for A level results, university attended, parents’ social class and class of degree, and so control for a lot of ability.
I suspect - based upon no more rigorous evidence than the experience of my contemporaries - that a chunk of these differences reflect Smith’s compensating advantages: some graduates trade off a high salary for more rewarding work.
Nevertheless, the likelihood is that such differences also reflect an element of luck.
Which raises the question: faced with such a large variation in the returns to a degree, who is going to be willing to pay £9000pa in tuition fees?
Not the average graduate; Dr Chevalier estimates that a fee of less than £5000 is the maximum he or she would pay.
Instead, it is the most overconfident - those who overestimate their chances of becoming a top earner.
Now, in one sense this is not catastrophic because overconfidence about one’s ability is to some extent a self-fulfilling belief; people who are overconfident are believed by others to be more able than they really are.
In another sense, though, it threatens (or promises) a radical change. Traditionally, being a university graduate has been a signal of ability. But it might become the opposite - a signal not of ability but of a particular form of irrationality. Having a degree might become like owning a Porsche - others think: “look at the prat who’s paid for fortune for that.”
This is, of course, consistent with the view - expressed more in the US than the UK for now - that education is in a speculative bubble.