Jihad, Middle age misery, PhD salaries, and other items from the Economist

A few interesting articles from the December 18, 2010 Economist magazine…

“Is it worth doing a PhD” notes that in Britain a man with a PhD earns 26 percent more than a man “who could have gone to university but chose not to” (i.e., a high school grad). In theory that extra 26 percent might make up for the 10+ years of lost wages during bachelor’s and graduate programs, but a man who gets a master’s degree earns a 23 percent premium. I.e., the difference in ultimate salary is nowhere near enough to make up for the lost wages of extra years in grad school and, in fact, in math and CS the premium does not exist. The economic damage of PhD programs is not limited to graduates, however. There are a huge number of dropouts and they tend to drop out after wasting many years in school (clinging “like limpets before eventually falling off”). As this is the Economist, the question of whether the PhD graduates might have had a lot of compensating fun during graduate school was not addressed.

In Economics Focus “Exploding misconceptions”, Barack Obama is quoted: “extremely poor societies…provide optimal breeding grounds for disease, terrorism and conflict.” The article cites studies by Alan Krueger of Princeton and Claude Berrebit of the RAND Corporation as well as surveys by the Pew Global Attitudes Project. Jihadists, including suicide bombers, turned out to have higher incomes and more education than average within their societies, e.g., in Lebanon or among the Palestinians in the West Bank and Gaza. The surveys of Muslims found that those with the most education were more likely to agree that suicide bombing against Western targets in Iraq was justified. As far as producing terrorists go, “citizens of the poorest countries were the least likely to commit a suicide attack”. (This dovetails with my November 2009 post “Who finances the Taliban and Al-Qaeda? We do.”)

Iceland, which let its banks fail, is compared to Ireland, which took on government debt to bail out its banks. Iceland had a painful brief period of adjustment and now is doing better than Ireland. (story)

The cover story “The U-bend of life” is about how average human happiness varies with age. Old people and young people are happy. The middle aged are miserable, with a reduction in happiness that starts around age 25, dips to a nadir at 46, and begins to rise again around 60. These data were adjusted for the presence of children and other responsibilities, supposedly. Tying this back to the first article discussed in this post, better educated people are happier, but the effect disappears when adjusted for income. A plumber or electrician who earns the same as a Ph.D. will be just as happy. [I guess one could argue that plumbing skill is in fact a “better education” than an abstruse Ph.D.]

19 thoughts on “Jihad, Middle age misery, PhD salaries, and other items from the Economist

  1. You mention the factoid about PhDs like it is news. I thought it was well-known that a PhD doesn’t make financial sense, from an earnings perspective: the slight increase in typical salary usually does not make up for the 3-5 years of lost earnings and experience. If your goal is to make money, get a Masters. On the other hand, a PhD opens up some career directions that aren’t available with a Masters. Many people report high personal satisfaction with those careers, even if they aren’t justified on money alone. Lots of people make career choices for reasons beyond financial interest.

  2. @AnonProfessor
    “a PhD opens up some career directions” … which careers are you talking about? I cannot think at any other answer than becoming a professor… unfortunately “America produced more than 100,000 doctoral degrees between 2005 and 2009. In the same period there were just 16,000 new professorships”, as reported by the Economist.

  3. Nearly at the bottom of the U bend, thankfully. We thought our hormones stopped at age 25 & we’d spend forever only worried about machines but apparently not. The popularity of May-December marriage may explain it for men. Suspect it’s a transition from failed ambitions to accepted reality for most.

  4. AnonProfessor: If the PhD opens up, for the average graduate, very enjoyable career options, you’d expect that to show up in surveys of happiness versus education, no? The studies cited by the Economist did not find that PhDs were happier than people with fewer degrees and similar income. Personally I would agree with you that making $50,000 per year as a tenured professor is a better job than making $71,000 per year collecting tolls (average salary) on the Massachusetts Turnpike (source: http://www.thebostonchannel.com/news/17507339/detail.html ), but very few of 2011’s PhDs will end up as tenured professors. And those who end up working three different adjunct jobs to cobble together a precarious $30,000/year income may end up dragging down the average happiness stats.

  5. The one about the terrorists seems almost counter-intuitive. You would think that looking into Obama’s quote wouldn’t be worth it, seems self-evident. But I read the Looming Tower about 4 months ago, and one of the themes running through it consistently, is that, even in the earliest days when the Soviet Union invaded Afghanistan, the Mujahideen were always generally bored, well-off (in Middle Eastern standards, and in some cases Western standards), who went to college, many with advanced degrees such as engineering (this could account for them being pissed off? 🙂 ) This is probably because, outside of Arab Afghans, no one could actually afford to fly to Afghanistan to help the cause unless they were rich. Now, of course, there were still plenty of poor people, but the pay (during the early years, anyhow) was generally very good.

    On a side note, if we take his society to be equivalent to a country, this might be true. The poorer countries are probably easier to hold up camp and get away with it.

  6. Re “The U-bend of Life”, I recall pro basketball player Grant Hill being
    quoted as saying that it’s pretty hard to stay sad about anything when you’re making $200,000 every two weeks, so I think money (cliche` warning) can help to buy
    happiness, or at least assist in dampening mid-life depression a good bit.
    As far as the happy/unhappy scale varying with age, I can attest to a serious
    unhappiness attack commencing in my mid-forties. It was about then that
    I finally had to admit that I wasn’t what you’d call a young man any longer and
    that to generate any remarkable accomplishments in my life, I’d better get serious about doing so and stop thinking: “I’ve got my whole life ahead of me…”

  7. When it comes to higher education, with undergrad costs going over $50K/year, it’s getting to the point where you have to sit down and really think if an *undergraduate* degree is worth the cost, much less an MS or PhD.

    On Terror education and income. I wonder how meaningful a stat “average education” and “average income” are in places where the average citizens earns far less than a burger king fry cook. What is the literacy rate of your average citizen in Pakistan? It shouldn’t be that surprising that terrorists, while relatively poor on average (by Western standards), are not the absolute sleep-on-dirt-eating-worms-for-subsistence poor of their native countries.

    As for the relatively unhappiness of the middle age, this can easily be explained by having to get up and work for some schmuck for 40 years of your life. Even if the “schmuck” you work for is a nice person, it still sucks that you HAVE to wake up and report to this person to maintain your mortgage, feed the kids, and pay the car note. Young people and retired people have more control over their schedules and more time to enjoy life.

  8. A PhD is not just about becoming a professor. It is also a necessary prerequisite for most research-oriented jobs, e.g., researcher in an industry research lab, advanced R&D. I’ve also seen a number of our PhD students take innovations they developed in their dissertation and form or join startups, to commercialize their ideas. Only a small fraction of our PhD graduates go on to become a professor, and at my school, many or most of our PhD students have no plans or desire to enter academia.

    I agree the system is broken: there are incentives that cause overproduction of PhDs, especially in the humanities.

    However, I think the article is a bit misleading. First off, the situation for humanities PhDs tends to be very different from engineering PhDs; a humanities PhD may prepare you only for entering academia, but in the engineering and sciences, there are many other career paths. Second, I think you have to distinguish between top schools and 2nd- or 3rd-tier schools; at a top school, PhD graduates have a much better chance of being able to follow their preferred career path (including entering academia, if that’s the student’s goal), whereas at a 2nd- or 3rd-tier school, that’s less true.

    I’m not familiar with any data on career satisfaction or personal happiness vs education level. I didn’t see that in the Economist article; did I miss it?

    Overall, I think whether to go for a PhD is a very personal decision that depends a lot upon the specific individual. For the overwhelming majority of graduating undergraduate students, a PhD does not make sense. But there are many students for whom a PhD degree can be a great choice that can open many doors. The article seems too focused on statistics and could leave the mistaken impression that a PhD never makes sense; in my experience, that is not the case.

  9. dino@3 “which careers are you talking about? I cannot think at any other answer than becoming a professor… ”
    Then, you aren’t trying hard enough. PhDs are not without use in the Pharmaceutical industry. They can be useful in other industries too. Investment banks hired a few.

  10. I am not saying that a PhD is without value. It does have a value that depends on many factors: the topic, the university, your advisor, the number and quality of publications it lead to, the years it took… What I am saying is that 1) it is not _necessary_ unless you want to become a professor (or even more realistically, to become a post-doc—professorship or tenure is four/five years later, at best); 2) a PhD has a value and a _cost_, in terms of money, time, experience, happiness, etc. You should weight all these factors when you make decisions; your employer will weight (differently) these factors (and others) when he decides whether to hire you or not; and he will probably weight a PhD the same (or more likely less) than, e.g., four/five years of hands-on experience after a master. I completely agree with the analysis on the Economist: there is a bubble of PhDs that has been boosted by universities for collecting low-cost, high-quality labor to cope with the increasing number of undergraduate students, research topics, proposals, publications, etc.

  11. @d
    njkayaker is correct with regard to the pharma industry. PhDs are often required for senior positions regardless of how many years experience an MS has. Whether it makes sense or not may be up for debate but it doesn’t alter the situation. I’m not familiar with the PhD situation for non-pharma industries, though I’d speculate experience may be better able to substitute for the degree.

  12. Could it be that the “middle-aged” feel the pressure on keeping it all running? And could it be that they are more than fed up seeing all their work done for “nothing”. You have a job you get taxed…You have to be out on the street and pay another hefty tax (of around 70-80% here in Germany) on each liter of fuel. And if you have children you have to pay extra for education. If you do not feel the public schools are up-to-the-task, then it’s quite another hefty “sum”. If you want to do anything, you have to ask some bureaucrat for allowance….

  13. A nice article from the BBC that the economist wouldn’t write: ‘Is working with your hands better than with just your head?’. http://www.bbc.co.uk/news/magazine-12108000

    What I find annoying is that despite the facts about salary differences, parents will still insist on pushing their kids to university. The recent UK increases in tuition fees won’t make a difference. UK students will face debts of £40,000 for a under-graduate degree.

  14. @jbc15

    Pharma has been shedding scientists for nearly a decade now, and it doesn’t appear to be stopping anytime soon. Pharma is in the #2 spot for job losses two years running and the years before that were just as bad. A PhD really just doesn’t pay off. Pharma probably the industry that employs the most PhD scientists and the market is still bad. It only gets worse for other classes of scientists from there.

  15. Folks: I don’t think Pharma is a great example for PhDs overall. Biology has been the most rapidly changing field in the last few decades and that gives PhDs in that one subject an atypical edge. What is true for a PhD in the fastest changing and most economically relevant subject will not be true for an average PhD. Even biotech will mature to the point that substantial skills are being taught to high school students and undergrads. Gene sequencing was once something that only PhD students and postdocs could do. Now a high school kid can do it.

    http://www.insidehighered.com/news/2010/11/29/doctorates has some stats on how many PhDs were granted in 2009 and if you “click to view full table” you’ll see the different departments. Humanities PhDs are “up by nearly 3.5 percent”. I would be surprised if the U.S. economy produced 3.5 percent more jobs for humanities PhDs in 2009.

  16. A couple of friends of mine are in the more humanities related fields, and they’re mostly still in school (they’re my age, but I graduated over 3 1/2 yrs ago) because they can’t find any jobs and getting paid to go to school is a better option. Getting the PhD is basically a side-effect of a crappy economy.

  17. The NYTimes had an interesting story on this topic. The gist is that the situation for the young in Europe is even worse than in the US. They highlight a young woman who has a law degree and a master’s and still can’t get a job:

    The Times blames part of this on demographics–the old timers are hanging on to their jobs and won’t make room for the young. But I think their misguided social policies are largely to blame. It is next to impossible to fire someone once they are hired so businesses only hire when they are forced to. Also, high taxes and regulations have resulted in much lower growth rates than in the US in the past. It remains to be seen how we do with the tilt to the Left in the past Congress.

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