Which Majors Make the Most?

When we choose a major in college we are to some extent choosing a series of future wage rates. The amount of human capital in which we invest is to some extent linked to our college major — different college majors generate different wages.

Many of my students, and often unfortunately too their parents, believe that unless they major in business or engineering they are doomed to lives of poverty.

I just published some research I’ve done on University of Texas graduates. While differences in earnings by college major are huge, once you account for longer hours worked by business and engineering majors, by the fact that they often have higher SAT scores, and other factors, the differences are much smaller; indeed, over half of the variation in earnings by major disappears.

In other words, the amounts of human capital generated in college by different choices of major are not so different from one another as most people believe. Liberal arts majors don’t do that much worse than business majors; and economics majors do as well as business majors do.