There is a general rule about all investments. You sacrifice the present for a brighter future.
This is the opposite of a divestment, in which a person sacrifices his
future for a brighter present. Investment in mutual funds, property,
companies, and stocks falls under this category. What about investment
in a degree ?
In any investment, we need to be concnerned about about just one term, called ROI
- Return on investment. This is the expected amount of return from the
investment, especially in the long run. We need to evaluate any degree in this light. Let us now
take a look at a couple of degrees such as B.Tech, MBA, MBBS, and Ph.D.
Let us take a look at MBBS first. By
prepending a Dr. in front of a name, the MBBS degree gives its holder a
monopoly in the healthcare profession. People without this degree are
not allowed to legally practice medicine. Along with this very high
barrier to entry,
this also guarantees access to an universal profession. Any corner of
the world that you go to, a doctor will always be required. This is
independent of the geography, culture, climate and politics. People are
willing to compromise on almost every luxury in life, other than good
health. This ensures that doctors will always be sought after. It also
ensures that doctors will always be employable, have a lot of options
to find jobs, and enjoy an exalted sense of respect in society. To a
large extent this is true in India and United States - the societies
that I am most familiar with.
The other good thing about an MBBS degree is that it has an infinite
shelf life.
This means that once a doctor, always a doctor. This might not hold
across countries. However, most countries have fairly straightforward
ways of recognizing degrees from other countries. Let us define three
essential requirements of a degree on the lines of what we have
discussed.
- Barrier to Entry
- Shelf Life
- Quality of a Typical Job
Let us now consider another degree like LLB (Bachelorate in Law). It
clearly guarantees a barrier to entry, because nobody else is allowed
to practice law. After one obtains a license to practice in court, the
degree and associated licenses remain valid ad infintum. Finally, the
legal profession is very interesting and challenging. Especially, in
post liberalised India, corporate law has become a very prestigious
profession.
From this discussion, we observe that we want a degree that guarantees a long, reliable, and successful career.
Sadly, a lot of first line degrees like B.Tech or B.Sc fail some of
these criteria, which necessitates the need for higher education. Let
us consider the quintessential case of a very bright person holding a
degree from a premier institution. Let us assume that she holds a
B.Tech in computer science.
In this case, the barrier to entry is the knowledge of computer science.
It will be hard, though no impossible in today's scenario for somebody
with a degree in mechanical engineering to get the same job as she is
doing. Even if we consider computer scientists, India produces
thousands of them every year. The job market is full of good
computer science resumes from very good institutes at almost
every level. This makes it difficult to enforce a barrier to entry.
Let us now look at
shelf life.
As mentioned earlier, a degree in medicine or law lasts for as long as
a person is alive. However, the situation here is slightly different. A
bachelor's degree, is a troika of three parameters - university rank,
class rank, and project experience. A bachelor's from a prestigious
institution is the most beneficial at the time of campus interviews.
Students from premier institutions have a clear advantage in
campus placements as compared to others. However, this is just for the
first job. What about the second and third jobs? The answer to these
questions would have been in the positive if the job market enforces a
strict barrier to entry based on the prestige of the bachelor's degree.
Unfortunately, this is not the case. A good bachelor's degree is not very strongly correlated with success in a job.
It is true that the probability of a student passing out from a premier
institution doing well in later life, is high. However, this is neither
a
sufficient nor a necessary condition.
If we take a look at the profile of people in top US universities, or
in top companies in India, a discerning reader would agree with my
conclusion. Secondly, performance in a job also depends upon many
other soft skills like good communication, networking, and sometimes
sheer luck. Please note, that I am not advocating that people should
not strive to join top colleges for obtaining their bachelor's degrees.
All I am saying is that a good bachelor's has diminishing returns. It
is the most useful at the time of regular campus placements. Some of
the sheen wears of after three years, when people typically look for
their second job. By the end of ten years, potential employers are much
more interested in the work experience gained over the last ten years,
than pedigree alone.
Lastly, let us take a look at job quality. This in my opinion is highly
variable. A good bachelor's degree ensures that the person gets a head
start. I would opine that a premier institution ensures that its
graduates have a high mean job quality in the job market. Somebody, from an
institution with a lower stature, will start at a lower mean. Now, the
job market will induce some variance over and above this mean. Given
the the economic and geo-political disturbances that characterize our
times, the variance is pretty high. Based on a lot of resumes
that I have seen in my brief stint in corporate India, at the end of
about 15 years, a large part of the initial gains can get lost. At this point, job
experience and successes in previous jobs becomes very important.
This is where, I would like to make the case for higher education,
especially for degrees like M.Tech, MS and Ph.D. Let us consider the
case of Ph.D first.
Like MBBS, it also prepends a Dr. in front of the name. It also gives
exclusive access to high end research facilities, and academic
institutions. I have seen a lot of request for proposals in industry
that explicitly require the head of the project to have a doctorate
degree. In this sense, it enforces a
barrier to entry.
It also has an infinite shelf life. Even after 50 years, certain jobs
would still require a person to have a Ph.D primarily to satisfy some
legal requirements. The degree does not lose most of its sheen over
time.
I wouldn't really bat for job quality here since it is a very personal and very
subjective opinion. I personally feel that a job in a research lab or
in academia gives people a very high degree of independence. However,
people can tend to think otherwise. Nonetheless, for people who care
about freedom, and creativity, it is certainly a very good option.
To some measure, a master's degree carries a lot of these benfits. I
remember a very successful manager in a very top company once telling
me that one day the fact that he didn't have a master's would catch up
with him. He was considering joining a master's program.
The crux of my argument can be summarized in this table.
Degree
|
Barrier to entry
|
Shelf life
|
Job quality
mean
|
Job quality
variance
|
MBBS
|
very high
|
high
|
high
|
moderate
|
LLB
|
very high
|
very high
|
high
|
moderate
|
B.Tech from
premier inst.
|
low
|
low
|
high
|
high
|
B.Tech from
non-premier inst.
|
low
|
low
|
low
|
high
|
M.Tech / MS
|
moderate
|
modate
|
high
|
moderate
|
Ph.D
|
high
|
high
|
high
|
low
|
My premise is that MBBS is probably a very important degree as compared
to many others because it instantly allows a person to make money even
out of an individual enterprise in any corner of the world.
However, even higher degrees in medicine are sometimes required to get
an even better professional life.
For engineering degrees, my humble opinion is that a good B.Tech
ensures that graduates have a very good starting point. However, beyond
that, they fall prey to the vagaries of the real world. Since success
in a job depends on technical skills, soft skills, and sometimes
being lucky enough to be at the right place at the right time,
professional success can be highly non-deterministic.
My views are that a higher degree like MS or Ph.D can decrease some of
the non-determinism induced by the real world and provide some much
needed additional job security. Furthemore, it also allows people to
take on professions like teaching even after they retire from their
regular jobs; thus, ensuring that their employment is life long.
My two cents
Smruti Ranjan Sarangi