Benefits beyond the rates of return to doctoral studies

A new study released by RCUK last week of PhD holders’ careers demonstrates the economic and social value of the highly specialised education of doctorates, even in jobs where a PhD qualification is not a requirement.

“Having been trained as problem solvers to the highest level, [doctorates] also found themselves using these competencies to solve ‘the problem’ of their own careers.”

The fact that higher education levels are associated with higher wages is well documented, both in the UK and elsewhere. It is also well known that these higher wages stem partially from the types of job roles performed by graduates and post-graduates, but even comparing workers within occupations higher education commands a premium in the labour market.

This of course does not mean that every doctoral holder out there is earning more in every occupation, as reflected in multiple examples we all have. Rates of return are good for comparing collectives of people but reflect just the average and around this average, not each single person with some people earning slightly more or less.

This makes it possible for doctorate holders in the lower tail of their own wage distribution to earn lower wages than non-doctors in the upper tail of their own distribution – resulting in doubts as to whether a doctorate is good value if only judged on the basis of how much the person earns at work.

Rather than just using the rate of return to compare investments, including the investment in gaining a PhD, this analysis demonstrates the need to understand both the wider return and the reasons why that investment was made.

It should not surprise many that most PhDs do not go into further study just to earn higher wages. All of the considerations of what a PhD means for those who pursue it are covered by this study, together with seeking a better understanding of what a PhD means for employers.

The study was commissioned by RCUK, HEFCE and HEFCW and the collective of choice was three generations of PhD qualifiers from the cohorts of 2003/4 through to 2005/6. A selection of 1,839 of them volunteered their experiences post-graduation so we can better understand motives and careers.

“The potential is vast if employee and employer convene to collaborate on how to overcome the small initial cost of unlocking it.”

Respondents represented a diverse range of disciplines and they included some of them who end up the lower tail of the wage distribution and found themselves reporting that the investment was not worth the effort for them.

However for the majority, the decision to take a PhD was positive. Not least because having been trained as problem solvers to the highest level, they also found themselves using these competencies to solve ‘the problem’ of their own careers.

So having a PhD earns you a good job not just because your expertise is of value for others but because of the value of the expertise for yourself.

But just as PhDs don’t study just for the money, nor do they expect just money out of it! Among many findings, the career tracking study demonstrates that satisfaction with the PhD investment is wider than earnings, and this renders rates of return a poor means for demonstrating the value of a PhD for the person, the employer and society.

What else can be done to fill in that vacuum?

The RCUK study goes on to ask 67 employers about the value of PhDs in their organisations, whether required or not, confirming some assumption but also casting doubt on some received wisdoms.

“Satisfaction with the PhD investment is wider than earnings, and this renders rates of return a poor means for demonstrating the value of a PhD for the person, the employer and society.”

Consulted employers with dedicated recruitment lines for doctoral holders are unsurprisingly able to identify the competencies and benefits that these employees bring, typically problem solving and creative skills. Those with experience employing PhDs are also aware of the development needs of these recruits, particularly in understanding commercial working environments, and do not expect them to be immediately fully functional outside the academic environment.

While this inflexibility poses a barrier for some, other employers with experience recruiting PhDs take it as part of the recruitment process, admittedly a cost but similar to the rarely avoidable cost of induction.

Of course, industry experience of PhDs helps compensate for this cost to some extent and increasing attention is being given to the importance of exposing PhDs to non-academic working environments as part of their studies.

Alternatively, employers can see employing PhDs as an investment themselves, just as the PhD is an investment for the student. By inputting a minor induction cost they can obtain increasing returns for their money, as demonstrated by the ‘spillover’ effect where others are more productive just by working with PhDs, and wider benefits in open innovation and absorptive capacity.

The potential is vast if employee and employer convene to collaborate on how to overcome the small initial cost of unlocking it.

Dr Rosa Fernandez is Director of Research at NCUB.