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The Costs of and Net Returns to College Major

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  • Joseph G. Altonji
  • Seth D. Zimmerman
Abstract
This paper uses administrative student and expenditure data from Florida public universities to describe a) how the cost of producing graduates varies by major, b) how the inclusion of major-specific instructional costs alters the estimated net returns to different fields of study, and c) how major-specific instructional expenditures changed between 1999 and 2013. We find that the cost of producing graduates in the highest cost major (engineering) is roughly double that of producing graduates in low-cost majors, such as business. Cross-major comparisons of per graduate earnings returns net of costs differ from comparisons based on earnings outcomes alone in economically significant ways for a number of fields. Differences between net returns and earnings returns per dollar of instructional spending are even more pronounced. Our analysis of trends in instructional expenditures shows that per credit expenditures for undergraduate classes dropped by 16% in Florida universities between 1999 and 2013. The largest drops occurred in engineering and health, where per credit spending fell by more than 40%. Observed spending changes have little relationship with per credit costs or earnings outcomes.

Suggested Citation

  • Joseph G. Altonji & Seth D. Zimmerman, 2017. "The Costs of and Net Returns to College Major," NBER Working Papers 23029, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:23029
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    4. Daway-Ducanes, Sarah Lynne S. & Pernia, Elena E. & Ramos, Vincent Jerald R., 2022. "On the “income advantage” in course choices and admissions: Evidence from the University of the Philippines," International Journal of Educational Development, Elsevier, vol. 91(C).
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    6. Herberholz, Lars & Wigger, Berthold U., 2021. "Efficiency of European universities: A comparison of peers," Research Policy, Elsevier, vol. 50(9).
    7. Lars Herberholz & Berthold U. Wigger, 2020. "Efficiency of European Universities: A Comparison of Peers," CESifo Working Paper Series 8044, CESifo.
    8. Federico Huneeus & Conrad Miller & Christopher Neilson & Seth Zimmerman, 2021. "Firm Sorting, College Major, and the Gender Earnings Gap," Working Papers Central Bank of Chile 917, Central Bank of Chile.
    9. Ran Abramitzky & Victor Lavy & Maayan Segev, 2024. "The Effect of Changes in the Skill Premium on College Degree Attainment and the Choice of Major," Journal of Labor Economics, University of Chicago Press, vol. 42(1), pages 245-288.
    10. Philip Oreopoulos, 2021. "What Limits College Success? A Review and Further Analysis of Holzer and Baum's Making College Work," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 546-573, June.
    11. Steven W. Hemelt & Kevin M. Stange & Fernando Furquim & Andrew Simon & John E. Sawyer, 2021. "Why Is Math Cheaper than English? Understanding Cost Differences in Higher Education," Journal of Labor Economics, University of Chicago Press, vol. 39(2), pages 397-435.
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    13. Kyle Glenn, 2021. "Social Labor vs Human Capital: Competing Theories of Skills," Working Papers 2115, New School for Social Research, Department of Economics.
    14. Joseph Han, 2022. "College Majors in Limited Supply: The Case of Private Universities in Korea," Korean Economic Review, Korean Economic Association, vol. 38, pages 381-414.
    15. Arpita Patnaik & Matthew J. Wiswall & Basit Zafar, 2020. "College Majors," NBER Working Papers 27645, National Bureau of Economic Research, Inc.
    16. Michael D. Burroughs, 2018. "How to survive a crisis: reclaiming philosophy as a public practice," Palgrave Communications, Palgrave Macmillan, vol. 4(1), pages 1-5, December.
    17. John V. Winters, 2017. "Do Native STEM Graduates Increase Innovation? Evidence from U.S. Metropolitan Areas," Economics Working Paper Series 1714, Oklahoma State University, Department of Economics and Legal Studies in Business.
    18. Kuuppelomäki, Tiina & Kortelainen, Mika & Suhonen, Tuomo & Virtanen, Hanna, 2019. "Does admission to elite engineering school make a difference?," Working Papers 127, VATT Institute for Economic Research.
    19. Fethke, Gary, 2021. "Efficient enrollments using high tuition-high aid," Journal of Policy Modeling, Elsevier, vol. 43(3), pages 543-557.

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    More about this item

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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