Trash research from Universities UK

Here's some wonderfully sloppy reporting from the BBC:

University graduates earn on average about a quarter more than young people who leave school after their A-levels, a study has suggested. Higher education organisation Universities UK measured the economic impact of getting a degree. It found average additional earnings of £160,000 over a working life.

In fact, Universities UK didn't measure anything. They commissioned PriceWaterhouseCoopers to do the research (pdf). And they didn't measure anything either. The "quarter more" estimate (actually 23.5%) - from which the £160,000 figure is derived - is lifted from table 4.2 of this paper (pdf), which PWC contrive to misname.
PWC claim this estimate is "representative of the wider literature."
Well, it ain't representative of this paper, which PWC don't cite. It estimates that male graduates earn just 15.2% more than ones with A levels. And roughly one-sixth of them earn less than 11.1% more.
Even more scandalously, the report claims that "there has been no erosion of the financial benefit of a degree even though there has been a substantial incresase in the supply of graduates."
Evidence for this comes from this paper (pdf). Strangely, however, the report fails to mention this paper by Nigel O'Leary and Peter Sloane. It concluded:

There is concerted evidence to suggest that the expansion in student numbers has led to some moderation of the financial rewards offered to recent cohorts of graduates. These findings are more pronounced for women than they are for men, are more pronounced in the lower reaches of the skill/earnings distribution than at higher skill/earnings levels, and are more concentrated for arts degrees.

For example, they estimate that among women born in the 1970s, the degree mark-up was 22.8%. But for women born in the 1980s, it's only 14.5%.
The report also claims that "in Britain's knowledge-based economy there is every prospect that this demand [for graduates] will continue to grow in the future."
But it provides no evidence for this. This just seems like vindication of Simon Barnes' wise words:

One of the rum things about human life is that we treat any stage we happen to be going though as something permanent and unchangeable, as if spring will never come, as if happiness will never end, as if youth will last for ever.

Certainly, the report doesn't cite this paper which points out that India and China are becoming massive suppliers of cheap skilled labour, which could depress graduate earnings in the future. It says:

The expansion of higher education may...create a substantial wastage of talent amongst college and university graduates leading to a greater disersion in incomes as graduates accept sub-graduate work.

What Universities UK is doing, then, is not research. It's just touting  for business, by painting as bright a picture as it can of the returns to education and (deliberately?) ignoring dissonant evidence. But who cares about the futures of our young people when there's a few bob to be made out of them?

Comments

[dearieme]

Even if a University education didn't add to your income, a case could still be made for it in terms of education changing you for the better. That argument gets harder to make when this week's Telegraph reveals that one undergraduate Arts course at York gives its students two hours of teaching per week in a student-led seminar, plus two half-hour sessions per TERM with a PhD student. That's it.

[Planeshift]

I wouldn't be too hard on the BBC, the story is just a re-written press release. Most of the content is like that, few journalists will actually investigate a story when they can just use copy and paste. I'd wager that most reporting of research in the MSM is like this.

[Chris]

This is a rancid piece.

The report doesn't fit your pet theory, and that's why you don't like it.

Anyway, let's give you the slagging you gave the report....

The Bratti, Naylor and Smith research you cite, claiming that PWC didn't cover it compared the returns for people born in 1958 with those born in 1970. That basically looks at the last wave of university expansions in the 1960s, it uses a small, attrition-prone sample, and it also disgrees with other findings (also not cited by PWC) from the same institution, the Institution for Educational Research at Warwick, using census data from the 70s, 80s and 90s.

The 'paper' you link to for O'Leary and Sloane is in fact Peter Sloane's biography. (to be fair, I'm not convinced by the LSE paper you use Sloane's biography to rebut).

The fact that Philip Brown thinks that Chinese and Indian graduates pose a threat to earnings is neither here nor there. Philip Brown also thinks that university expansion is a bad idea, that the US labour market is a good model for the UK labour market and, according to his book, "The Mismanagement of Talent", that the only occupations suitable for university graduates are the old professions, such as medicine, the law and academia. The Council for Industry in Higher Education report, by Brown (a different Brown) and Ternouth last year, and commissioned by the Government, did make the point that currently our graduates are doing ok in the global market, but that, especially in technical disciplines, socks need to be pulled sharply up if global firms aren't going to decamp en masse to the Indian IITs to recruit in the near future. So it's hardly as if the corridors of power are wilfully ignoring the message that clear-sighted thinkers like yourself are purveying.

You're actually doing exactly what you claim that PWC have done in their report - selected your evidence to suit a thesis.

In particular, you've entirely ignored the hugely inconvenient (to you) OECD research into educational returns in a range of countries that suggest that the UK premium for a degree is, largely, holding up. Most people who work in the field agree on a few things:

- the premium is eroding, yes, but rather more slowly than we expected. 1 or 2 % per year
- it is, however, bloody hard to tell exactly what that premium is, because it involves large-scale salary surveys, which are very costly to run
- this report probably overstates the returns, but not by much (I personally reckon it's around 15-20% too high for the overall figure)
- all bets are off if we have a recession.

I appreciate that this is long, critical, and may be rather dull. I work for neither PWC or UUK, and I wasn't involved in this report - but I am involved in research into graduate employment.

One thing Planeshift got right is that the BBC story (and everyone else's) is just a rehashed press release. The standard of reporting on HE issues in the UK is abysmal.

[chris]

You're right - I was using selective evidence. But I was doing so to balance out the selective evidence PWC used. My point was merely to show that, as you say, it is "bloody hard to say."
What I found offensive about the report was that self-interested advertising - attracting customers - was presented as an authoritative report.
Here's the pdf of the O'Leary and Sloane paper:
http://ftp.iza.org/dp1549.pdf

[Chris]

Chris (this is going to get confusing), that's disingenuous. It's Universities UK's job to promote UK universities, so of course they are going to present a good picture.

So saying, the authors don't shy away from admitting that the rate of return for arts graduates is not at all good, and may be effectively zero for male arts graduates (which also agrees with other research from the IER at Warwick into graduate careers that they don't cite). They also point out that there's a substantial gender pay gap, and that returns on postgraduate study are not substantial. So it's hardly a whitewash of every piece of unpleasant evidence.

What is significant about the report is that basically it is setting out for everyone what the 'official' figure for a degree premium currently is, as everyone was still quoting that plainly absurd £400,000 figure from the fees debate.

The report basically does summarise the true situation - the overall degree premium is somewhere in the £100-200k region, that there is quite considerable variation between degree areas (why didn't I do medicine?), and that there is no clear evidence one way or another about whether, in financial terms, the 'value' of a degree has decreased. It's basically a literature review, and it's nowhere near as bad as you make out.

Incidentally, the O'Leary paper you link to uses a sample that most would consider too small from which to draw firm conclusions (just over 300 - it needs to be 1000). The sample is also, they admit, too young to get an accurate picture of lifetime earnings, or to compare properly with non-graduates, so they have to use some statistical jiggery-pokery which may, or may not, be correct. As they kindly tell us in the introduction of the paper, the authors have already decided their conclusion in advance, so it is hardly unexpected that their evidence supports it.

The authors actually hedge their bets somewhat by admitting that their findings both support university expansion, by showing increased demand for graduates and mitigate against it, by showing a reduced premium in the small sample they choose.

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