The entry requirements for German universities are strongly market determined: Simplified, if applications exceed planned capacity, admission office will raise the required average GPA until demand meets supply. While there are exceptions (universities often "overbook" to take into account the stochasticity of realized intake), the NC can be interpreted as an equivalent of a market clearing equilibrium "price" for a degree.
If education is seen as an investment into human capital, the optimal degree decision for a prospective student should significantly depend on the expected return after graduation (say, sum of discounted future income/utility). However, a look at the data delivers an interesting counterfactual.
Using recent 2009/2010 NC data from the three major Berlin universities (Humboldt-Universitaet, Freie Universitaet and Technische Universitaet) on 152 degrees and data from a salary survey for university graduates from July/August 2009 (mm-Gehaltsreport, 91.000 cases), I find a negative correlation (-0.271) between NC (i.e. the "price" of a degree) and its future return. This is quite a puzzling fact which also persists when taking into account possible time lags (a student "pork-cycle") : The negative correlation between current NC and expected return in more than 20 years is even higher (-0.545).
Apparently, German students fail in allocating efficiently according to market forces. What are the possible explanations? Intuitively, I can think of two explanations: First, it could be an information problem. This becomes evident when looking at the significantly high rate of drop outs and degree switches (in fact, this causes an enormous social cost for public expenditure). Another explanation might be that students simply have different preferences, tending to embark on studies they are intrinsically interested in - without caring much about future prospects. Such a choice is surely laudable socially, but probably an issue economically.
PS: If interested in dataset, drop me a mail. If you have a more comprehensive, national dataset, please let me know as well.
GX.
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hej guo,
ReplyDeleteas i embarked on applying as a degreeseeking student at the hu, and thus informed myself on the various ncs, i was struck by the very phenomena you are describing here.
to my great suprise, programmes that are so attractive in sweden that one has to get working experience/go through interviewing/ be lucky in a lottery (and naturally have a 1,0 nc) such as medicine engineering law et cetera were more accesible than art history, deaf studies or even something as profitable as ancient greek studies :)
humanities programmes in sweden usually have "platsgaranti" meaning that anyone with a pass in maths swedish and english is guaranteed a spot (and financing of their studies for that matter)
however to explain this discrepancy, i have an alternative hypothesis, namely that whereas in sweden the jobmarket for ppl within the cultural field is close to nil, in berlin, due to its proliferation of galleries publishing companies et cetera, there are good career opportunities for ppl within the humanities
i dont have any statistics to prove this thesis, nor do i know whether the expected income in your study was based on the whole off germany or just berlin..but i do think that berlin has an idiosyncratic jobmarket offering good opportunities for ppl within fields classically regarded as nonprofitable.
all the best , siri
heya siri, good to hear from you!
ReplyDeletejust few remarks: remember that berlin is on unemployed and old. the unemployment rate is about 14% and the mean berlin age is above national average. even if the city seems to be a "creative industry" from a subjective viewpoint, berlin has no real (economic) creative industry, with most of the publishing companies located in hamburg, munich and the galleries in south germany (i think of stuttgart).
also, while the income survey was national wide, you would expect graduates to be rather mobile at least within national borders (unless you assume some "berlin-rigidity"). basically i don't agree that there are good career opportunities (in terms of income) for humanities in berlin and if so, those are mostly under precarious conditions with minimum pay or even no payment at all. in fact, it is very hard to find a job in berlin and most students leave berlin after graduation (there was a report on that but i can't recall the url at the moment).
and as you might remember, berlin is poor but sexy.
take care,guo