Your GPA Shows Up In Your Paycheck

by Patrick Appel

earnings-gpa

Jonnelle Marte examines a new study that uses GPA to predict future earnings:

A report published Monday in the Eastern Economic Journal by researchers from the University of Miami found that a person’s grade-point average in high school not only indicates the person’s chances of getting into college and whether he or she will finish college or graduate school. It could also be an indicator of how much that person will earn later in life.

Indeed, for a one-point increase in a person’s high school GPA, average annual earnings in adulthood increased by about 12 percent for men and about 14 percent for women, the report found. (Men and women were looked at separately since women have lower average earnings than men, making about $30,000 on average in adulthood compared with the average of $43,000 for men.)

Bryce Covert focuses on the gender gap:

The team of University of Miami researchers found that a one-point increase in GPA means a 12 percent boost in earnings for men and a 14 percent boost for women. Even so, there’s a big gender gap in total earnings. A woman who got a 4.0 GPA in high school will only be worth about as much, income-wise, as a man who got a 2.0. A woman with a 2.0 average will make about as much as a man with a 0 GPA. The data also show that average high school GPAs are significantly higher for women, but men will still end up having significantly higher income later on.

It also found that high school grades can indicate the likelihood of going to college, and that a one-point increase doubles the chances of completing a degree for both genders.

Last week, Philip N. Cohen put these kinds of studies in context. He used the National Longitudinal Survey of Youth to compare the “Armed Forces Qualifying Test scores, taken in 1999, when the respondents were ages 15-19 with their household income in 2011, when they were 27-31.” He found “a very strong relationship—that correlation of 0.35 means AFQT explains 12 percent of the variation in household income”:

But take heart, ye parents in the age of uncertainty: 12 percent of the variation leaves a lot left over. This variable can’t account for how creative your children are, how sociable, how attractive, how driven, how entitled, how connected, or how white they may be. To get a sense of all the other things that matter, here is the same data, with the same regression line, but now with all 5,248 individual points plotted as well (which means we have to rescale the y-axis):

Test Scores

Each dot is a person’s life—or two aspects of it, anyway—with the virtually infinite sources of variability that make up the wonder of social existence. All of a sudden that strong relationship doesn’t feel like something you can bank on with any given individual.