Is ROI in Education Too Simplistic?

The concept of ROI in education is not new. Majors have been ranked on this metric for years. Engineering and economics rise above gender studies and english literature in most analyses, while Ancient Languages and Medieval History are viewed as a courses of study entirely too anachronistic to even consider in the reports. Putting aside vocational schools that market to students the promise of professional skills and income generation upon graduation, I think ROI based on income is too simplifying a metric in education to be prescriptive. Just because income is measurable does not mean that it is the only useful metric, and presenting it as such is potentially negative. ROI, a measure of income generation vs. costs of education, is incomplete because 1) it understates value creation and 2) excludes non-financial variables that matter to us.

On the first point, income is not synonymous with value creation. Your income is likely to be higher at a corporate law firm than working in a health clinic in rural Africa, but is it multiples more valuable? For a variety of reasons, certain careers are not lucrative (e.g. industry structure and relative power, profitability, positive externalities cannot be internalized, etc.), but we cannot ignore that there exists value that is not captured in income (or gets captured in somebody else’s income). ROl as published ignores the fact that writers may influence the creative thinking of engineers even though they capture only a fraction of that value in the form of book sales. It will undervalue historical linguists whose work may actually inform modern day natural language processing and encryption. A response to this could state that value generated for society does not pay the bills and therefore is not a consideration that people practically build into their personal calculus. Value generated for one’s self is exactly equal to income. That is not necessarily true, and this takes us to point two.

There are non-income related sources of ‘return’ that are very much part of personal decision-making on 'school vs. no school’ or choice of major. Exposure to diverse perspectives, the experience itself of living in a community of amazing people for 4 years, meaningful relationships, personal fulfillment and happiness from one’s career, acceptance in one’s community are all examples of important characteristics not always captured in income. If income were directly proportional to personal fulfillment, would the distribution of wealth across professions be the exact same as the status quo? Likely, no.

Now I am not arguing that ROI as we know it is a useless metric. The cost of education is rising and student debt is a very real concern. Income is important to consider when choosing a career because it can affect the life you want to live. What I am saying is that it is not the only thing to consider, and should not be presented as the be-all and end-all metric. Over-emphasizing ROI when considering the value of education or of particular majors could result in some sort of unexpected distortion. Exaggerating for the purposes of making the point, if everyone chose their majors based on the ROI income data, we will over index the population to skill sets and careers that are able to capture the most value as income in a single point in time (the present) at the expense of careers that actually generate the most value (independent of income captured). We may also lose the diversity of thought and skills sets that are required to innovate and advance over long periods of time.

I will conclude my ramble by saying that publishing the typical incomes associated with each major is probably a net positive since it paints a realistic picture for students as they make important decisions. But to ask questions like, “Is education worth it?” or “Is studying English worth it?” while exclusively citing this metric misrepresents the full story and discounts many important sources of value and fulfillment.