Fun with Excel: Credentialism I

I keep hearing that college graduates are likely to earn a million dollars more over their lifetimes than people who never earn a college degree. Does this mean that a college degree is worth a million dollars? I'm going to steer clear of some arguments such as investing instead of taking on debt. Instead, I'm going to explain a very simple concept in a manner that is more complicated than necessary.


Like other posts in my Fun with Excel series, I have created a spreadsheet. This one can be found at: Credentialism I.xlsx

This first spreadsheet will be the simplest in the series. I have created 1,000 fake people. This has been followed by a random value between 0 and 1 to reflect ability within a schooling environment. I have created another random value to represent monthly earnings. Because the biggest earners earn substantially more than the lower wage earners, I did not go with a straight random value. Instead, I used =1/RAND()*1000. Because I wanted to compare the same values under different circumstances, all formulas have been replaced by their resulting values.

I have two versions of these 1,000 people. One embraces both random values being established independently of each other. The other includes the same values, but they were both sorted to ensure that ranks in schooling performance corresponds to monthly earnings.

After these tables were generated, I calculated the high, low, and average earnings based on percentiles. I also added totals and a breakdown by the top half and low half. You can think of this as the nonsensical binary idea of educated individuals versus uneducated individuals. Under this approach, so-called educated individuals earn more than $8,000 extra each month, and over $100,000 extra each year. Over just ten years, that would exceed the million already mentioned.

The only difference between lists is the sorting. I even included totals to show that they are the same. Without adding a single dollar, it is possible to show how college could seeming be worth a million dollars more.

Obviously, there's more to this than just the sorting. There has to be a reason that many businesses prefer to hire college graduates. Of course, these reasons may not be as beneficial as they seem. More importantly, I think I have made one thing clear. Simply comparing earnings of college graduates to those who lack a degree is insufficient to show the value of going to college.