Working Paper: NBER ID: w25314
Authors: Steven W. Hemelt; Kevin M. Stange; Fernando Furquim; Andrew Simon; John E. Sawyer
Abstract: The private return to postsecondary investment varies widely by field, but the resources required by different fields are not well known. This paper establishes five new facts about college costs using novel department-level data. First, costs vary widely across field, ranging from electrical engineering (109 percent higher costs than English) to math (22 percent lower). Costs are generally higher in fields where graduates earn more and in pre-professional programs. Second, this pattern is explained statistically by differences in class size and faculty pay, though differences in production technology enable some fields to offset higher salaries with larger classes. Third, some STEM fields experienced steep declines in expenditures over the past fifteen years while others saw increases. Fourth, increases in class size and teaching loads alongside a shift in faculty composition toward contingent faculty explain these trends. Finally, online instruction is associated with a modest reduction in cost per student, but only for undergraduate instruction. Recent policy efforts to promote enrollment in high-earning fields will thus have important implications for postsecondary costs and the social return on investment in higher education.
Keywords: Higher Education; Cost Differences; Postsecondary Education; STEM Fields; Instructional Costs
JEL Codes: I21; I22; I23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher costs (J32) | class size (C55) |
| higher costs (J32) | faculty pay (M52) |
| class size (C55) | higher costs (J32) |
| faculty pay (M52) | higher costs (J32) |
| class size (C55) | teaching loads (A21) |
| teaching loads (A21) | higher costs (J32) |
| online instruction (Y20) | costs per student (I21) |
| cost differences (L11) | field of study (A12) |