The Costs of and Net Returns to College Major

47 Pages Posted: 11 Jan 2017

See all articles by Joseph G. Altonji

Joseph G. Altonji

Yale University - Economic Growth Center; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation

Seth D. Zimmerman

Yale University; University of Chicago - Booth School of Business

Date Written: January 2017

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

Altonji, Joseph G. and Zimmerman, Seth D., The Costs of and Net Returns to College Major (January 2017). NBER Working Paper No. w23029. Available at SSRN: https://ssrn.com/abstract=2895882

Joseph G. Altonji (Contact Author)

Yale University - Economic Growth Center ( email )

Box 208269
New Haven, CT 06520-8269
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Seth D. Zimmerman

Yale University ( email )

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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