Motivation

During my last semester of undergrad at UT Austin, I took a class on the Economics of Education which discussed causal inference in the field of education. It has been empirically proven that more years of education leads to higher wages and lifetime earnings. I will be using R to analyze and visualize data to help show the value of a college degree. This interactive data visualization will be using data from the US Bureau of Labor Statistics.

Comparing Increases in Tuition to the Rate of Inflation

According to the US Bureau of Labor Statistics, the CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. College tuition and fixed fees is a significant component of the tuition, other school fees and childcare index. Not all goods in the CPI increase in line with the rate of inflation, as seen below in the following visualization using plotly, tidyverse, tidyquant and readr:

Analysis of Inflation Data

  • According to the US Bureau of Labor Statistics CPI Inflation Calculator: https://www.bls.gov/data/inflation_calculator.htm

  • $10,000 in January 1978 has the same buying power as $44,608.32 in December 2021

  • The cumulative percentage increase for inflation between Jan 1978 and Dec 2021 is 346.08%

  • College tuition used to cost around $58.30 per month in January 1978 and now costs around $896.184 per month in December 2021

  • The cumulative percentage increase for tuition between Jan 1978 and Dec 2021 is 1437.19%

  • Increases in college tuition have outpaced the rate of inflation by more than a factor of 4 (4.15x)

Comparing Average Weekly Earnings to the Level of Educational Attainment

With the rising costs of obtaining a college degree in the US, some students may find it difficult to justify attending a 4-year university to obtain a bachelor’s degree. As a result, these students may decide to either not attend college altogether or to obtain a cheaper 2-year associate’s degree. In addition, financial hardships may lead to some students not being able to finish their 4-year bachelor’s degree. However, as seen below in the following visualization using plotly, tidyverse, tidyquant and readr, data from the US Bureau of Labor Statistics demonstrates that the median weekly wages of full-time and salary workers aged 25 and over differ significantly by their levels of educational attainment:

Analysis of Earnings Data

  • In 2022, individuals with a bachelor’s degree or higher earned $1,525 a week, compared to $938 for those with some college or an associate’s degree, $827 for those with a high school degree and no college and $670 for those with less than a high school degree.

  • Individuals with a bachelor’s degree earn significantly more per week compared to those without a bachelor’s degree across the time period from 2000 to 2022 and across all levels of educational attainment.

  • In addition, while the increases in weekly earnings have been relatively constant for the other three levels of educational attainment, individuals with a bachelor’s degree or higher have seen significant increases in their weekly earnings starting from 2015.

Additional Charts for Analysis

Earnings by Educational Attainment in Q1 2022 for Bottom 10%, Bottom 25%, Median, Top 25%, and Top 10%

Source: https://www.bls.gov/charts/usual-weekly-earnings/usual-weekly-earnings-by-quartiles-and-selected-deciles-by-education.htm

  • The weekly earnings potential of those with a bachelor’s degree or higher is significantly greater than those with less than a bachelor’s degree across the upper and lower deciles, upper and low quartiles and the median.

Median Annual Earnings and Unemployment Rate by Educational Attainment

Source: https://www.northeastern.edu/bachelors-completion/news/average-salary-by-education-level/

  • There is an inverse relationship between your years of education and unemployment rate. As you obtain higher levels of educational attainment, you are less likely to be unemployed at any given time and you earn significantly higher meaning earnings.

Lifetime Earnings by Educational Attainment

Source: https://news.wsu.edu/news/2011/08/05/how-do-education-and-occupations-affect-lifetime-earnings/

  • A bachelor’s degree at a public state university costs around $10,000 in tuition per year over 4 years, and assuming that room and board is also around $10,000 a year, obtaining a bachelor’s degree costs an individual around $80,000 over 4 years.

  • If you decide to attend a private university, tuition would cost around $35,000 per year over 4 years which increases the total cost of a bachelor’s degree to around $180,000 over 4 years. This number is assuming that the student has no scholarships or financial aid, which would reduce their out-of-pocket cost of attending university.

  • As indicated by the chart, a bachelor’s degree holder makes around $500,000 higher lifetime earnings than an associate’s degree holder, around $750,000 higher lifetime earnings than someone with some college and no degree and around $1,000,000 higher lifetime earnings than someone with only a high school diploma.

  • If you decide to attend additional years of education after you obtain your bachelor’s degree, your lifetime earnings increase even further, by around $400,000 higher lifetime earnings for those with a master’s degree, around $1,000,000 higher lifetime earnings for those with a doctorate’s degree.

  • The highest level of education attainment is a professional degree such as a doctor with an MD or DO at around $1,400,000 higher lifetime earnings compared to a student with a bachelor’s degree. Master’s degrees take around 1-2 years to complete and doctorate’s and professional degrees take around 4-8 years to complete, so keep that in mind when considering pursuing a postgraduate degree.

Conclusion

Limitations and Further Studies