The economic benefits of a chemistry degree

The research on the economic benefits of higher education qualifications, carried out by PricewaterhouseCoopers, quantifies the costs and benefits to both individuals and the state. 

The PricewaterhouseCoopers’ report provides the data to back-up what many have instinctively felt – physical science graduates are equipped with the skills for a wide variety of high earning careers. Only medicine and law graduates will earn significantly more. 

The report used Office for National Statistics data from the Quarterly Labour Force Surveys. Earnings were analysed based on the specific degree taken, rather than the career pursued. 

Average earnings premium

The average earnings premium of having a degree relative to those with 2 or more A Levels was approximately £129,000. The figure represents the difference in lifetime earnings after tax. Graduates in chemistry or physics on average earn well above this value, with a £185,000 - £190,000 premium above those with no degree.

Year-on-year statistics show that these subject differentials start to become apparent in the mid-career years: it is beyond the age of 30 that chemists and physicists start to pull away from their contemporaries in their earning power. 

As well as the simple calculations of lifetime earnings, the study also factored in the costs associated with taking a degree and offset these against the economic benefits, to come up with a rate of return. The costs take into account lost earnings whilst studying. 

For any graduate, the average rate of return is about 12% per annum but rises to 15% per annum for chemistry graduates. Psychology graduates will enjoy only a 10% rate of return. 

Benefit to the state

In addition to the rate of return for an individual, the rate of return to the state also shows a differential. The rate of return of higher education to the exchequer considers the increase in taxation revenue a graduate will contribute due to enhanced earnings, against the cost of providing the education. These figures do not follow the same patterns as the rate of return for an individual. 

Although chemistry and physics graduates have enhanced lifetime earnings, these degrees are considerably more expensive than non-lab based subjects. It currently costs the state an average of £21,000 to provide education to degree level but a chemistry or physics degree will cost up to £6,000 more. 

But studying chemistry or physics still provides a considerable benefit to the state. The exchequer will receive approximately £130,000 additional taxation revenue in comparison to £93,000 for an average graduate. The extra cost of laboratory-based teaching is recouped several times over. 

The rate of return to the state for a chemistry graduate is just over 12% which is actually the average value for all degrees. Law and management have the highest return to the state, at over 19%, whilst medicine’s return is only 7.8% due to the considerable costs of the training. 

The study also modelled the impact of student fees and found that despite the increased financial burden on students in the medium to long term, the additional financial assistance in the short term (in the form of grants and loans) will actually lead to an overall increase in the rate of return. The study estimated that the lifetime benefits to an individual would increase by £2,650. This amount is at the expense of the state. In future, undertaking any higher education will be even more financially worthwhile for the student. 

Getting the message across

The growth in the number of UK school leavers going on to higher education has been unprecedented over the last 10 years. Since 1997/98 there has been a 9% increase in the number of full time undergraduates. But these increases have not been reflected across all subjects. The expansion is significantly skewed towards the biological and social sciences. 

The PriceWaterhouseCoopers report confirms that studying chemistry is a better economic option than many alternative subjects. It is not clear if students are aware of these economic factors when choosing a university degree. The RSC hopes that this study will become part of its ammunition for attracting students to the physical sciences. 

A digest of the report has been sent to all UK schools and colleges. The report is being quoted in general careers information and in advertorials on the opportunities available to those with a chemical science qualification. The report has also been quoted externally, most notably by Lord May (former President of the Royal Society) in a careers editorial for the Independent newspapers Fusion magazine. 

Chemistry is a source of inspiration and excitement for most of those who chose to study it at university and it is this element that teachers need to pass onto their students. However, a reminder of the significant economic benefits of a chemistry degree can only be positive for the RSC’s advocacy of the discipline.