LETTERS: What is the worth of a public university education compared with that of a private one?
University graduates and school-leavers' idea of worth would likely be in terms of how high their salaries would be for their first job, and the skills they would acquire upon going through the whole intellectual gamut that is of an ivory tower.
That is, choosing between a public and private university education typically comes down to the practical and pragmatic consideration of what the returns to higher education investment would be.
In terms of institutional funding and student loan allocation, Malaysian public universities are the main beneficiaries compared with their private counterparts.
With such substantial financial resources support, one would expect the public university graduates to reap the larger share of returns to education when they step into the job market.
However, this is not the case when it was unveiled in the 2018 Malaysian Graduate Tracer Study that the bulk of public university graduates are the ones earning relatively lower salaries than their private university peers.
General unfavourable perceptions from current and prospective employers on the skill incompetencies of public university graduates further complicate the issue.
Consequently, it makes us ponder the fundamental question: what is the worth of public and private university education, from the standpoint of costs and returns to education?
To address this question, a team of higher education researchers from Universiti Utara Malaysia consisting of this writer together with Professor Hock-Eam Lim and Professor Russayani Ismail, recently came up with a Public-Private University Worth parity index.
They define university worth as the ratio of returns to higher education to total costs, that is, using salaries and skills' value-addedness to operationalise returns, and defining total costs as the sum of direct (tuition fees, accommodation, food, out-of-pocket) and indirect (forgone salaries of choosing to pursue higher education) costs.
Using survey data of more than 1,000 fresh public and private university graduates, their parity indices unveil an anomaly: in terms of job salaries, public university education has a lower worth than private university education, although in terms of skills' value-addedness, public university education has a higher worth.
Herein lies the puzzle. In accordance with the orthodox human capital theory, if graduates from public universities possess better skills, shouldn't they also be earning more than their peers from private universities?
In explaining this puzzle, it turns out that there has yet to be any convincing evidence on how education, work productivity and job salaries are related.
The accuracy of this theoretical relationship is based only on the assumption of a perfectly competitive labour market, meaning, the most educated and skilled are assumed to be the most productive, and therefore earn the highest salaries.
Challenging the orthodox human capital theory, a recent book, The death of human capital? Its Failed Promise and How to Renew It in an Age of Disruption, proposes a relatively unorthodox notion.
That is, the reason why some are not earning salaries commensurate with their superior skills is because there are insufficient high-skilled jobs in the economy.
This is very different from the traditional human capital theory, which basically says that there is not enough high-skilled labour.
Both our public and private universities are already giving their best in nurturing future graduates; the country needs to ensure sufficient numbers of high-skilled jobs are available.
DR JAN-JAN SOON
Member, PenDaPaT (Pertubuhan Pembangunan Penyelidikan dan Dasar Pendidikan Tinggi Malaysia) and Universiti Utara Malaysia
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times