Yesterday I gave a presentation to a group of post-secondary educators. One of the follow-up questions dealt with the issue, “Is higher education worth it?” This question called out a research study I completed in 2010 of variables related to income of a random sample of 1,479,869 U.S. citizens, aged 25 to 64. I would like to share some major findings related to the odds of enjoying an above median income, $34,300 in 2008.
Odds of Enjoying an Above an Above Median Income
Gender - The odds of an above median income are 2.77 times larger for males than females, holding all other variables constant. By taking the reciprocal of the male odds ratio we can identify the odds of a female enjoying an above median income. This math indicates that being female decreases the odds of an above median income by a factor of .36, holding the other variables constant.
Race – White - The odds of an above median income are 1.41 times larger for whites than nonwhites, holding all other variables constant. The reciprocal of the white odds ratio indicates that being non-white decreases the odds of an above median income by a factor of .71.
Labor Force Participation - Participants in the labor force are 7.69 times more likely to enjoy an above median income than non-participants, holding all covariates constant.
High School Diploma - Individuals with a high school diploma are 2.27 times more likely to enjoy an above median income than those without a high school diploma, holding all other covariates constant.
One Year of College to More than One Year of College, But No Degree - Individuals with one year of college have a 3.40 times larger expectation to enjoy an above median income compared to individuals without this characteristic. Individuals with more than one year of college but no degree have a 3.90 times larger expectation to enjoy an above median income compared to individuals without this experience.
Associate’s Degree - The odds of an above median income are 5.47 times larger for individuals holding an associate’s degree than individuals not possessing this degree, holding all other variables constant.
Bachelor’s Degree - Compared to individuals without a bachelor’s degree, individuals holding a bachelor’s degree improve their likelihood of an above median income by a factor of 9.58, all other covariates constant.
Master’s Degree - Holding all other variables constant, the possession of a master’s degree improves the odds of enjoying an above median income by a factor of 18.44, when compared to individuals without this endowment.
Ph.D./Professional Degree - The odds of an above median income are 22.85 times larger for Ph.D./professional degree recipients than for individuals without one of these endowments, holding all other variables constant.
Age - The odds ratio for age is very close to 1. Values close to 1.0 indicate no relationship between the dependent and independent variable.
If one excludes labor force odds, which logically is a necessary and sufficient function for an above median income for the great majority of Americans, the surest pathway to an above median income is through higher education. The higher the level of educational attainment the greater the odds of an above median income.
Tomorrow, we will examine the odds of being in the 90th percentile of income earners.
Morrison, Michael C. (2010). Decomposing Inequalities in Personal Income.