Higher Education 19:239-257 (1990) �9 Kluwer Academic Publishers, Dordrecht - Printed in the Netherlands

Determining the subject balance in higher education: how should this be done?

JIM TAYLOR* Department of Economics, Management School, University of Lancaster, Lancaster LA1 4YX, U.K.

Abstract. It is the U.K. Government's policy to achieve "the right number and balance of graduates in the 1990s". According to the Government, this will require more attention being paid to "the needs of the economy" when decisions concerning the allocation of resources between subject areas are being made. In particular, the Government believes that higher education should be more vocationally-oriented and aims to influence the subject balance in this direction. The purpose of this paper is to examine the possibility of constructing a set of indicators for deciding which subjects have produced the most marketable and the most satisfied graduates. Two sets of indicators are constructed. The first is based on labour market indicators such as the earnings and unemployment rates of graduates. The second set of indicators is based upon information about the value which the graduates themselves place upon their degree qualifications. When these two sets of indicators were combined, substantial differences were found in the relative worth of graduates in different subjects (for male and female graduates separately). Graduates in some subjects achieved far higher scores than graduates in other subjects on either one or both sets of indicators.

I. Introduction

Until the 1980s, it was taken for granted that the subject balance of the higher education sector should be responsive to the demand for places from qualified applicants. Supply responded to demand as a direct consequence of the application of the Robbins principle, which "assumed as an axiom that courses of higher education should be available for all those who are qualified by ability and attainment to pursue them and who wish to do so". (Robbins Report 1963). The higher education sector was therefore demand-driven.

The public funding of higher education in the U.K. became far more restrictive in the mid-1970s, following the national financial crisis of 1976. The financial constraints on the growth of higher education which began in the late 1970s culminated in the 1981/84 cuts in government funding to the university sector following the determination of the newly-elected Thatcher Government to cut public spending across the board. The 1981/84 cuts in public funding were accompanied by a considerable sea change in government policy towards higher education. In particular, the Government made it clear that it expected the higher education sector to become more efficient and more effective.

240

The G o v e r n m e n t ' s po l icy t owards higher educa t ion was made clear in the

1985 Green P a p e r (The Development of Higher Education into the 1990s) which focused u p o n the need to give the t axpaye r value for money :

So long as taxpayers substantially finance higher education ... the benefit has to be sufficient to meet the cost. (p. 10)

I t is wi th this caveat in m i n d tha t the G o v e r n m e n t dec ided tha t the ba lance

o f g radua te s and d ip loma tes p r o d u c e d by the h igher educa t ion sector should

be more sensit ive to the needs o f the economy. This a im was fo r th r igh t ly

expressed on the first page o f the 1987 Whi t e P a p e r (Higher Education: Meeting the Challenge) which s ta ted tha t :

above all there is an urgent need, in the interests of the nation as a whole, and therefore of universities, polytechnics and colleges themselves, for higher education to take increasing account of the economic requirements of the country. (pp. 1-2)

A n d in the p r e a m b l e to the W h i t e Pape r , the G o v e r n m e n t argues that :

To take greater account of the country's needs for highly qualified manpower, the Government will study the needs of the economy so as to achieve the right number and balance of graduates in the 1990s. (p. iv)

Moreove r ,

The Government will monitor carefully the evidence of actual student demand for places from year to year. It will carry out a major interdepartmental review of prospective needs for new graduates by industry, commerce and the public services ... If evidence of student or employer demand suggests subsequently that graduate output will not be in line with the economy's needs, the Governement will consider whether the planning framework should be adjusted. (p. 9)

The G o v e r n m e n t has a l r eady p rov ided s t rong signals to the h igher educa t ion

sector a b o u t its views on the ba lance o f subjects . The 1985 Green P a p e r s ta ted

tha t :

In higher education the Government believes it right to maintain a distinct emphasis on technologi- cal and directly vocational courses at all levels, leading to a switch in output in favour of graduates and diplomates with corresponding qualifications. It will pursue this policy in the light of developments in the schools, and in consultation with the advisory bodies, and will consider what action should be taken if significant likely shortages in particular areas are identified. (p. 8)

E x p a n d i n g technolog ica l and voca t iona l courses , however , has impl ica t ions

for the ar ts and humani t ies :

Those responsible for counselling intending students (and, perhaps, particularly girls) about their subject choices should be aware that the proportion of arts places in higher education as a whole can be expected to shrink. (p. 9)

The G o v e r n m e n t the re fo re believes tha t h igher educa t ion should become more

di rec t ly voca t iona l ly -o r i en ted and a ims to achieve this ob jec t ive t h r o u g h

241

manpower planning exercises which will provide information about the de- mand and supply for graduates in different subject areas.

Both the 1985 Green Paper and the 1987 White Paper therefore indicated a marked shift towards a more centralised system of determining the shape, size and form of the higher education sector. The direction of the shift is perhaps a surprising one for a Government which had been espousing the benefits of the free market (and hence consumer power). Indeed, the Govern- ment itself appears to have recognised its own inconsistency and has recently shifted its position back towards a demand-led system in which more consumer power is to be put into the hands of potential students, though the Government will still have a very firm grip on the financial reins.

Three recent policy initiatives are likely to have a major impact on the higher education sector during the foreseeable future - assuming they are taken on board. The most significant and striking of these initiatives is the stated intention of the Government (through the Education Secretary, Kenneth Baker, at Lancaster University in January 1989) to raise the age participation rate 1 in higher education substantially above its current level of 15~ In addition, institutions of higher education are being encouraged to search more vigorously for mature students who for one reason or another missed out on higher education when they were younger. The Government therefore wants to see a major expansion in student numbers during the 1990s.

The second (and related) recent development in higher education policy is the proposal to switch public funding away from the block grant system towards one more responsive to student demand for higher education courses (DES 1989). In 1989/90, block grants constituted 9201o of the total public funding of the university sector (89% in the polytechnic and colleges sector). A recent consultative document from the Department of Education and Science proposes an increase in the tuition free from s 607 in 1989/90 to s 1675 in 1990/91 (DES 1989). It is intended that this will be followed by a differen- tiated fee system in 1991/92 based upon four bands ranging from s 1675 in the humanities, social sciences and languages to s 3200 per student in medicine, dentistry and veterinary science. This change in the method of funding will increase fee income to about 20~ of the total public funding of higher education in 1990/91 and to about 30~ when differentiated fees are intro- duced in 1991/92. Needless to say, these new fees are well below average cost but are intended to exceed marginal cost on courses which have spare capacity. 2

A primary motive of this new funding arrangement is to induce institutions of higher education to increase their output of graduates, but at lower unit cost. The DES consultative document states that:

to the extent that the higher fee income covers marginal costs, it will assist in encouraging institutions to exploit spare capacity by taking in additional students, so contributing to the

242

objective of widening access to those able to benefit and wishing to do so, while in the process reducing costs. (DES 1989, p. 2)

Moreover,

by making institutions' income dependent in larger measure on their ability to attract and satisfy student demand, this funding approach will both promote effectiveness in marketing and teaching, and enhance the scope of institutional independence. (DES 1989, p. 2)

Given that many institutions of higher education face severe financial prob-

lems, the incentives to respond to the Government 's offer of at least s 1675 per year for each extra student after 1991/92 will be a strong one. In these

stringent financial circumstances, the Government will inevitably achieve (at

least in part) its dual aims of widening the access to higher education while simultaneously reducing unit costs. The danger, of course, is that the new

funding arrangements will induce institutions of higher education to take on more students in subject areas in which they do not have spare capacity;

s tudent/staff ratios will rise and this may well have harmful effects on the

quality of teaching, and perhaps even research. In effect, higher student/staff

ratios at undergraduate level will drive the higher education sector away from

traditional teaching methods (based upon small group seminars and tutorials)

and towards greater reliance on large group teaching. This switch in the funding method from block grants to student fees marks

a radical change in the Government 's higher education policy. But it is still

too early to sound the death knell for the increasingly centralised control which has emerged during the 1980s. 3 The Universities Funding Council will still be

dispensing 70% of public funds, for example, even when differentiated fees are introduced in 1991/92. Moreover, the Government itself will be setting the

fee structure and so will be able to exercise considerable influence over the

subject mix of the total supply of places on higher education courses. In discussing the fees to be set for individual subjects, for example, the consulta-

tive document states that:

the main criterion for allocation of courses to particular fee bands should be the cost of the course, although other features may have a part to play in particular circumstances. (DES 1989, p. 12)

These "o ther features" are not clarified but it is certainly possible that the Government will set the fee structure according to its own view of which subjects should be encouraged in the "national interest".

The third recent development in higher education policy is the proposal to introduce a student loan scheme. The current intention is to gradually build up towards a situation where the loan constitutes 50% of a student's total support. Opponents of the scheme argue that this will reduce the demand for higher education, especially by those from poor family background. The

243

Government counteract this by pointing to what it considers to be the existence of successful student loan schemes in countries such as the USA, Sweden, Japan, Canada, Germany and France. Furthermore, the Government argues that the introduction of a student loan scheme would help to bring more private sector money into higher education with the result that public funding could be used to widen access to higher education.

This brief review of recent revisions to the Government's higher education policy clearly indicates that the central aim is to substantially increase the number of graduates during the 1990s - albeit at lower levels of public expenditure per graduate. But in which direction should this expansion occur? Taking the 1987 White Paper and the recent proposal to introduce a differen- tial fee structure together, it seems fairly certain that the Government intends to exercise a good deal of influence over the subject mix of the future output of graduates. This raises three critical questions:

1. How much influence should the government exercise over the number of places available in each subject area?

2. What criteria should be used for deciding on the number of places to be offered in each subject area?

3. What indicators are available which will allow judgements to be made about the relative social worth of different degree subjects?

No attempt is made in this paper to answer the first of these three questions .4 Only the second and third questions are addressed here.

What types of indicators are required if government advisers are to provide efficient and effective advice (as indicated in the 1987 White Paper) about which subjects should be given the greatest inducements to expand? The Government has a clear preference for market-based indicators since these provide some indication of the extent to which graduates in each degree subject are satisfying the needs of the economy. This paper takes the view that it would be highly irresponsible to judge the social rate of return to public expenditure on higher education solely on the basis of labour market indicators. Such an approach would be exceedingly narrow-minded. Success in the labour market must, of course, be taken into account in any attempt to measure the relative social rate of return to public expenditure in each subject area; but other benefits flow from public expenditure on higher education in addition to those reflected by market indicators and these should not be ignored. Indeed, the Government recognises that ".. . the study of the humanities ... enriches the lives of students, helps to set the moral and social framework of our society, and prepares students well for many types of employment" (DES 1985, p. 3).

It is the purpose of this paper to argue the case for assessing the relative worth of each degree subject by including indicators based upon a wider range of variables than those reflected by market factors alone. Specifically, it is

244

argued that feedback from the recipients of higher education - the graduates themselves - should figure prominently in any assessment of the relative worthiness of the degrees which they obtain.

II. Recent changes in the subject balance of the U.K. university sector

Concern over the subject balance of the higher education sector cannot be adequately discussed without reference to recent changes in the subject mix itself. Some idea of the longer-term changes which have been taking place in the subject mix of the higher education sector as a whole at undergraduate level is provided in Table 1, which shows the changing distribution of undergrad- uate students between the main subject groups during 1975-85. Tables 2 and 3 show changes in the subject mix of universities and polytechnics during the 1980s.

For the higher education sector as a whole (see Table 1), the most dramatic longer-term change is the sharp increase in the proportion of students in the education group, a result of the disappearance of the Certificate of Education and its replacement by the Bachelor of Education degree. The only other changes of significance are the decline in the proportion of students in languages and the arts (from 18.6% in 1975 to 14.5~ in 1985) and the offsetting increase in the proportion of students in music, drama, art and design (from 4.6% in 1975 to 7.2~ in 1985). The broad picture of subject balance in the higher education sector provided by Table 1 conceals the radical changes which have been occurring to individual subjects within the broad groups.

Tables 2 and 3 provide more detailed information about changes in the subject mix for the university and polytechnic and colleges sectors separately. In the university sector, the main changes during 1980--87 were a rapid growth in business and financial studies (12.50/0) followed by fairly rapid growth in biological sciences (5.0%). These two subjects, together with the social sciences, accounted for the bulk of the increase in student numbers, but this was outweighed by the decrease in languages, the humanities and the physical sciences (see Table 2).

The polytechnic and colleges sector differed in one major respect from the university sector during the 1980s: student numbers expanded by 31% compar- ed to virtually no change in the university sector. Indeed, student numbers expanded in nearly every subject - though at considerably different rates (see Table 3). Somewhat surprisingly, the fastest growers have been in traditional academic disciplines such as history (140%), English (130%), mathematics (100%), geography (51%), biology (470/0) and languages (470/0), while various branches of engineering (chemicals, civil and mechanical) have been in decline.

Tab

le 1

. T

he c

hang

ing

dist

ribu

tion

of

UK

un

der

gra

du

ates

bet

wee

n th

e m

ain

sub

ject

gro

up

s 19

75-8

5

Mai

n su

bjec

t gr

oup

Nu

mb

er o

f st

uden

ts a

t u

nd

erg

rad

uat

e le

vel

or

equi

vale

nt (

in t

ho

usa

nd

s)

Sub

ject

mix

(%

of

tota

l)

1975

19

80

1981

19

82

1983

19

84

1985

19

75

1980

19

85

Edu

cati

on

4.0

36.7

33

.9

34.2

33

.9

35.6

35

.3

1.3

9.1

7.4

Med

icin

e, d

enti

stry

, he

alth

28

.4

32.4

33

.0

33.8

34

.3

34.7

35

.4

9.4

8.0

7.4

Eng

inee

ring

and

tec

hnol

ogy

45.9

57

.7

61.6

62

.5

62.9

64

.3

69.7

15

.3

14.2

14

.5

Agr

icul

ture

, ve

teri

nary

sci

ence

4.

1 5.

3 5.

4 5.

4 5.

2 5.

1 5.

2 1.

4 1.

3 1.

1 S

cien

ce

62.3

73

.4

83.6

86

.2

88.5

92

.2

95.6

20

.7

18.1

19

.9

Ad

min

., b

usin

ess

soci

al s

tudi

es

76.3

96

.9

104.

6 10

7.6

110.

0 11

2.2

117.

2 25

.3

23.9

24

.4

Arc

hite

ctur

e, o

ther

voc

atio

nal

10.0

12

.5

13.8

14

.9

15.9

16

.7

16.8

3.

3 3.

1 3.

5 L

angu

ages

, li

tera

ture

31

.7

37.9

40

.3

40.4

40

.2

40.5

41

.4

10.5

9.

3 8.

6 A

rts

(ext

. la

ngua

ges)

24

.4

31.5

36

.0

30.7

31

.6

28.8

28

.2

8.1

7.8

5.9

Mus

ic,

dram

a, a

rt,

desi

gn

13.9

20

.6

23.2

31

.5

31.8

33

.3

34.4

4.

6 5.

1 7.

2

Sour

ce:

Edu

cati

on S

tati

stic

s fo

r th

e U

nite

d K

ing

do

m,

vari

ous

issu

es,

HM

SO

, L

on

do

n.

t~

246

The number of students in engineering as a whole, however, has expanded by 18070 - considerably below the increase of 31070 for all subjects.

The question arises whether these recent changes in the subject mix of the higher education sector are consistent with government policy towards higher education.

IlL The evaluation of degree subjects

This section explores an approach to estimating the relative value of each degree subject based upon information relating to the performance of grad- uates in the labour market and relating to the value which the graduates themselves place upon their degree course. The data were obtained from the National Survey of 1980 Graduates and Diplomates,5 which covers about 10070 of the total students graduating in that year. This survey contains information about the socio-economic background, educational qualifications and work histories of nearly 8000 graduates from all U.K. institutions of higher edu- cation (including universities, polytechnics, central institutions and colleges of higher education). In addition to providing information about the work histories of graduates over the six year period following their graduation, the views of graduates about the value of their degree courses are recorded. It is

Table 2. Subject balance in the GB universities sector (undergraduate only): 1980--87

Subject group Full-time undergraduates (in thousands)

1980/81 1987/88 Change % C h a n g e

Education 2.6 2.5 - 0 . 1 - 3 . 8

Medicine and dentistry 23.1 22.8 - 0.3 - 1.3 Studies allied to medicine 6.3 6.5 0.2 3.2 Engineering and technology 32.7 32.5 - 0.2 - 0.6 Agriculture and related 5.3 4.7 - 0.6 - 11.3 Biological sciences 16.0 16.8 0.8 5.0 Mathematical sciences 15.0 15.2 0.2 1.3 Physical sciences 20.7 19.9 - 0.8 - 3.9 Business & financial 9.6 10.8 1.2 12.5 Social sciences 35.1 36.1 1.0 2.8 Architecture and related 3.7 3.7 0.0 0.0 Languages and related 28.7 27.4 - 1 . 3 - 4 . 5 Humanities 16.3 15.1 - 1.2 - 7.4 Creative arts 3.7 3.6 - 0.1 - 2.7 Multi-disciplinary 32.5 32.9 0.4 1.2

Total 251.3 250.5 - 0.8 - 0.2

Source: University Statistics, 1987/88, volume one (supplement), Universities Statistical Record, Cheltenham.

247

therefore possible to construct two sets of indicators from the National Survey of 1980 Graduates and Diplomates for one particular year, 1986. The first set provides indicators which purport to measure the relative success of graduates in the labour market. 6 The second set is based upon feedback from graduates which reflects the value which the graduates themselves place upon their degree course. Since information about each graduate's degree qualification is pro- vided, it is possible to construct indicators for each degree subject. We turn first to indicators based upon the performance of graduates in the labour market.

Table 3. Subject balance in the polytechnic sector: 1980-87

Subject group Advanced course enrolments

Change ~0Change 1980 1987 1980--87 1980-87

Education 15239 19564 4325 28 Medical, health, welfare 6494 8654 2160 33 Chemical engineering 719 614 - 105 - 1 5

Civil engineering 4990 4221 - 769 - 15 Electrical engineering 8162 11201 3039 37 Mechanical engineering 5341 4832 - 509 - 10 Other engineering 18589 23583 4994 27 Agriculture 45 20 - 25 - 56 Biology, applied biology 3936 5780 1844 47 Biochemistry 148 200 52 35 Maths 8729 17414 8685 100 Physics 1348 1465 117 9 Chemistry 4035 5258 1223 30 Geology, environmental science 174 373 199 114 Other sciences 8368 10565 2197 26 Business, economics, accountancy 48297 59859 11562 24 Geography 1334 2019 685 51 Law 6651 8984 2333 35 Other social sciences 10160 14274 4114 40 Architecture, other vocational 2 12505 14240 1735 14 English 982 2263 1281 130 Languages 3388 4981 1593 47 History 509 1222 713 140 Other arts 15286 21235 5949 39

All subjects 185429 242821 57392 31

Notes2 1. Includes full-time, sandwich and part-time students, and covers degree level courses, higher

diploma courses and professional courses. 2. Includes catering, home economics, librarianship, transport and other vocational subjects. Source: Statistics o f Further Education, 1980 and 1987, Department of Education and Science, London.

Ta

ble

4.

Lab

ou

r m

ark

et i

nd

icat

ors

ob

tain

ed f

rom

th

e N

ati

on

al

Su

rvey

of

1980

Gra

du

ates

an

d D

iplo

mat

es

Deg

ree

subj

ect

%

un

emp

loy

ed

Mea

n s

alar

y

070

incr

ease

in

rea

l ~

wo

rkin

g

Mea

n z

-sco

res

(mai

n gr

oup)

19

86

1986

sa

lary

198

0-86

ab

road

198

6

NS

GD

F

DR

M

ales

F

emal

es

Mal

es

Fem

ales

M

ales

F

emal

es

oo

Ed

uca

tio

n

1.6

4.0

1095

0 92

30

37

22

3.5

- 0.

27

- 0.

23

Ph

arm

acy

, o

ther

hea

lth

1.

7 1.

5 13

950

1114

0 87

57

4.

8 0.

42

0.34

C

hem

ical

eng

inee

ring

2.

2 6.

2 14

750

1269

0 63

57

9.

3 -

0.21

0.

11

Civ

il e

ngin

eeri

ng

1.8

4.6

12

640

1156

0 68

89

7.

9 -

0.28

0.

38

Ele

ctri

cal e

ngin

eeri

ng

0.5

5.7

1524

0 10

480

80

48

6.4

0.56

0.

12

Mec

hani

cal

engi

neer

ing

0.7

5.4

14

590

1071

0 64

30

8.

6 0.

07

- 0.

27

Oth

er e

ngin

eeri

ng

1.8

5.3

1501

0 10

950

78

58

8.4

0.11

-

0.10

A

gri

cult

ure

& r

elat

ed

2.9

5.0

12

860

1075

0 65

56

4.

5 -0

.06

0.

10

Bio

logy

, b

ota

ny

3.

9 8.

6 11

340

9890

52

35

4.

8 -

0.58

-

0.45

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oolo

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ph

ysi

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4.

7 9

.2

1378

0 98

50

59

7 7.

9 -

0.60

-

1.17

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ioch

emis

try

0.0

6.7

1150

0 10

850

24

35

9.0

-

0.65

-

O. 1

3 M

aths

, co

mp

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ng

2.

1 4.

1 16

560

1349

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1 79

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9 1.

04

1.08

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hysi

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ma

ths/

ph

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s 4

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8.3

1423

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mis

try

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680

1115

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0.15

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logy

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S

5.9

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er s

cien

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ombs

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330

1142

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54

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1 -

0.01

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01

Bus

ines

s, e

cono

mic

s et

c.

1.5

4.8

1626

0 12

460

132

86

2.3

1.42

1.

19

Geo

gra

ph

y

2.7

9.8

1230

0 10

530

64

49

3.1

0.03

0.

17

Law

1.

4 2.

2 16

620

1380

0 18

7 15

0 1.

9 1.

96

2.12

O

ther

soc

ial

scie

nces

4

.0

10.9

13

380

1043

0 91

53

4

.0

0.11

-

0.10

A

rchi

tect

ure,

pla

nn

ing

2.

4 2.

9 12

610

9940

77

49

4

.7

0.05

-0

.08

E

ng

lish

6.

0 9.

2 13

520

1017

0 79

49

4.

5 -

0.30

-

0.54

L

angu

ages

4.

3 6.

8 13

170

1000

0 80

41

8.

7 -

0.56

-

0.85

H

isto

ry

2.8

9.5

1228

0 10

570

67

54

5.0

- 0.

18

0.00

O

ther

art

s 4.

7 8.

4 10

800

9010

50

37

4.

5 -

0.75

-

0.71

All

subjects

3.0

6.6

13860

10520

80

50

5.3

No

te:

NS

GR

=

N

atio

nal

Sur

vey

of

1980

Gra

du

ates

an

d D

iplo

mat

es.

FD

R

=

Fir

st D

esti

nat

ion

Rec

ord.

T

he

NS

GR

un

emp

loy

men

t ra

te i

s us

ed i

n t

he

calc

ula

tio

n o

f th

e z-

scor

e.

Sour

ce:

Na

tio

na

l S

urv

ey o

f 19

80 G

radu

ate

s a

nd

Dip

lom

ate

s, E

mp

loy

men

t M

ark

et R

esea

rch

Un

it,

Dep

artm

ent

of

Em

plo

ym

ent,

Lo

nd

on

; F

irst

Des

tin

atio

n R

eco

rd,

Uni

vers

itie

s S

tati

stic

al R

eco

rd,

Che

ltea

laam

.

249

Market-based indicators

Four labour market indicators can be obtained from the National Survey of 1980 Graduates and Diplomates. These are as follows:

1. the unemployment rate of graduates in each degree subject 2. the average salary of graduates in each degree subject 3. the rate of increase in the salary of graduates in each degree subject 4. the percentage of graduates in each degree subject who work abroad.

The unemployment rate of graduates is the most commonly-used measure of the success of graduates in the labour market. Information on the graduate unemployment rate is available annually (for universities and polytechnics) from the First Destination Survey undertaken by the Careers Advisory Ser- vices. The 1985 Green Paper, for example, contains an appendix which includes estimated unemployment rates for university and polytechnic grad- uates in each degree subject. The Government's view about the value of the unemployment rate as a labour market indicator is made clear in the 1985 Green Paper:

Indicators are also available (particularly from First Destination Surveys) that give some guide to the value placed by the labour market on the output of different types of qualification. The DES is currently attempting to increase the scope and quality of these indicators. One such indicator is the extent to which new graduates are successful in finding employment by the December following graduation. (DES 1985, p. 55)

Since the National Survey of 1980 Graduates and Diplomates contains infor- mation about the status of graduates at the time of the survey, unemployment rates can be constructed for graduates in each degree subject. These are given in Table 4 together with the unemployment rate of those graduating in 1986. The correlation between these two sets of unemployment rates, both of which refer to 1986, is highly significant (R=0.63). This correlation is not high enough, however, to proceed on the assumption that the unemployment rate of newly-qualified graduates provides an accurate guide to the unemployment rate of graduates who have been in the labour market for several years. Both measures taken together, however, do yield useful information about the labour market status of the two sets of graduates.

A complementary labour market indicator to the unemployment rate is the mean salary level of graduates. To the extent that salary levels reflect the productivity of workers, it could be argued that graduates with high salaries are more productive than graduates with low salaries. Salary levels are there- fore used as an indicator of success in the labour market.

A further dimension can be added by using the rate of change in salary in addition to salary levels. Demand and supply analysis predicts a positive

250

relationship between the excess demand for labour and the rate of change in wages. Hence, the greater the shortage of graduates, the faster the growth in salaries. The rate of change in salaries therefore provides information about the dynamics of the labour market and complements the static information provided by salary levels.

Finally, economic theory argues that labour migration responds to wage differentials (and differentials in job opportunities) between labour markets. If salaries are higher in labour market A than in labour market B, workers will move from B to A. Net migration flows could therefore be used as an additional labour market indicator. The greater the proportion obtaining a job overseas, the lower the market demand (relative to supply) for those graduates in the U.K. labour market compared to overseas markets. If the U.K. labour market is buoyant relative to labour markets overseas, this will tend to reduce the out-migration of graduates from the U.K.

To obtain an assessment of how well each subject has performed on the basis of all four labour market indicators, it is necessary to convert the variables into comparable units of measurement. This can be done by calculating the z-scores (or standard scores) for each indicator. 7 Assuming that all four labour market indicators carry equal weight, s a combined index can be constructed by calculating the mean of the z-scores across all four indicators to obtain a combined labour market indicator for each subject. This com- bined labour market indicator is given in Table 5 for males and females separately.

The main result to emerge from the analysis of market indicators is that law, business and related studies, and maths/computing have very high scores on the combined labour market indicator (with an average z-score greater than unity for both male and female graduates). Chemical and electrical engineering also have distinctly higher than average scores on the labour market indicator, but only for males. At the other end of the spectrum, there are several subjects which have a relatively low score on the labour market indicator for both male and female graduates. These are: geology/environmental science, zool- ogy/physiology, languages, other arts and bi01ogy/botany. There is therefore a good deal of consistency between male and female graduates in the relative position of subject groups as measured by the combined labour market indicator.

Indicators based on graduate feedback

The value which graduates themselves place on their degree qualifications can be obtained from information provided by the National Survey of 1980 Graduates and Diplomates. In order to obtain information about the ex post

251

impressions of graduates of the benefits they have obtained from their degree qualifications, graduates were asked to indicate (on a four-point scale) whether their degree had been beneficial in helping them to:

(i) get an interesting job (ii) secure a good income (iii) become a widely educated person.

In addition, graduates were asked whether with hindsight they would choose the same (or a similar) course again. Since the answers to these four questions are ranked on a 1 to 4 point scale (with 1 = unfavourable and 4 = favourable), it is possible to calculate an average score for each subject. Noting that 2.5 is the mid-point in the range of 1 to 4, any subject with an average score over 2.5 indicates that graduates in this subject have obtained benefits in excess of what would be expected if the scores were random.

The results of this exercise are given in Table 5. As far as getting an interesting job is concerned, the response across all subjects indicates that on average a degree qualification has been helpful. There are marked differences, however, between subjects. Technical and vocationally-related subjects (phar- macy, engineering, business subjects, law, architecture and planning) perform- ed particularly well on this indicator - as did most of the sciences. The worst performers were geography, other social sciences and the arts and humanities.

Surprisingly, having a degree was not regarded (on average) as having been helpful in securing a good income. The response varied considerably, however, between subjects. Law, pharmacy, chemical and electrical engineering, maths and computing, and most of the sciences had substantially higher scores than geography, other social sciences, and the arts and humanities. Biology, bota- ny, zoology, physiology and biochemistry also had low scores. Comparing the first two indicators, we find that "getting an interesting job" and "securing a good income" are highly correlated (r=0.84).

The third graduate feedback indicator ("becoming a widely educated per- son") provides a totally different picture of the value of a degree qualification to the previous two. The arts, social sciences, biology, botany and zoology all score at or above the average and so reverse the results obtained for "securing a good income". Similarly, engineering, maths, computing and physics all score below average on this indicator (for both males and females).

Finally, despite the fact that graduates in different degree subjects differ in their views regarding the benefits which they obtained from their degree qualifications, it is interesting to discover that graduates on average would still choose to do the same (or a similar) course again. All subjects, with the single exception of civil engineering (males only), scored 3.1 or higher on this indicator. It therefore appears that graduates are generally satisfied that they had chosen the right degree course.

A combined index of the value obtained by graduates themselves from their

Tab

le 5

. In

dic

ato

rs b

ased

on

fee

db

ack

fro

m g

rad

uat

es

t.~

Deg

ree

subj

ect

Get

ting

an

Sec

urin

g a

Bec

omin

g a

Wo

uld

do

the

(mai

n gr

oup)

in

tere

stin

g jo

b

good

inc

ome

wid

ely

educ

ated

sa

me

cour

se a

gain

p

erso

n

Mea

n o

f z-

scor

es

t.~

M

F M

F

M

F M

F

M

F

Edu

cati

on

3.2

3.3

2.3

2.5

2.9

2.7

3.1

3.2

Pha

rmac

y, o

ther

hea

lth

3.4

3.4

3.3

3.1

2.9

2.8

3.4

3.5

Che

mic

al

engi

neer

ing

3.3

3.8

3.0

3.5

2.7

3.2

3.4

3.6

Civ

il en

gine

erin

g 3.

2 3.

0 2.

6 2.

5 2.

6 1.

9 2.

9 3.

3 E

lect

rica

l en

gine

erin

g 3.

6 3.

5 3.

3 3.

1 2.

7 2.

9 3.

4 3.

9 M

echa

nica

l en

gine

erin

g 3.

3 3.

2 2.

9 2.

8 2.

7 2.

5 3.

2 3.

2 O

ther

eng

inee

ring

3.

3 2.

9 3.

0 2.

6 2.

7 2.

7 3.

3 3.

2 A

gric

ultu

re,

vete

rina

ry

3.0

2.9

2.7

2.6

3.1

3.0

3.3

3.1

Bio

logy

, bo

tany

3.

0 2.

9 2.

2 2.

4 3.

1 3.

0 3.

0 3.

3 Z

oolo

gy,

phys

iolo

gy

3.2

2.8

2.3

2.1

3.2

2.8

3.1

3.1

Bio

chem

istr

y 3.

1 3.

1 2.

2 2.

6 2.

6 3.

1 3.

0 3.

3 M

aths

, co

mpu

ting

3.

3 3.

5 3.

1 3.

0 2.

6 2.

5 3.

4 3.

3 P

hysi

cs,

mat

hs/p

hysi

cs

3.3

3.2

3.0

2.7

2.7

2.6

3.3

3.3

Che

mis

try

3.1

3.3

2.7

2.8

2.9

2.6

3.1

3.2

Geo

logy

, E

S

3.3

2.8

2.9

2.2

3.1

3.2

3.3

3.2

Oth

er s

cien

ce c

ombs

. 3.

1 3.

2 2.

7 2.

6 2.

9 2.

9 3.

2 3.

1 B

usin

ess,

eco

nom

ics

etc.

3.

0 3.

1 2.

8 2.

9 2.

9 3.

0 3.

3 3.

4 G

eogr

aphy

2.

8 2.

9 2.

3 2.

4 3.

1 3.

2 3.

2 3.

2 L

aw

3.4

3.5

3.2

3.3

2.8

2.9

3.4

3.4

Oth

er s

ocia

l sc

ienc

es

2.8

2.9

2.4

2.4

3.1

3.2

3.2

3.1

Arc

hite

ctur

e, p

lann

ing

3.2

3.4

2.5

2.8

3.0

2.8

3.3

3.2

Eng

lish

2.

9 2.

8 2.

3 2.

2 3.

3 3.

1 3.

4 3.

2 L

angu

ages

2.

8 2.

7 2.

4 2.

2 3.

4 3.

2 3.

3 3.

2 H

isto

ry

2.8

2.7

2.3

2.3

3.3

3.2

3.3

3.3

Oth

er a

rts

2.7

2.8

2.1

2.1

3.2

3.1

3.5

3.3

-0.4

5

-0.1

9

0.83

0.

80

0.32

1.

86

-0.8

2

-0.9

5

0.84

1.

53

-0.0

1

-0.2

3

0.19

-0

.46

0.

07

-0.3

5

-0.6

6

-0.2

1

-0.1

4

-0.9

3

0.12

0.

18

0.28

0.

29

0.19

-0

.08

-0

.29

-0

.07

0.

53

-0.4

0

-0.1

6

-0.1

9

--

0.

07

0.44

-0

.54

-0

.19

0.

66

0.96

-0

.47

-0

.33

0.

05

0.18

0.

04

- 0.

48

-0.0

3

-0.4

9

-0.2

0

-0.2

8

-0.2

9

-0.4

1

All

sub

ject

s 3.

1 3.

0 2.

7 2.

5 2.

9 3.

0 3.

2 3.

2

Not

e:

(a)

The

re w

ere

less

th

an s

even

fem

ale

grad

uate

s in

che

mic

al e

ngin

eeri

ng,

elec

tric

al

(b)

M

=

Mal

es;

F =

F

emal

es.

Sour

ce:

Nat

iona

l Su

rvey

of

1980

Gra

duat

es a

nd D

iplo

mat

es,

Em

plo

ym

ent

Mar

ket

engi

neer

ing

and

mec

hani

cal

engi

neer

ing.

Res

earc

h U

nit,

Dep

artm

ent

of

Em

plo

ym

ent,

Lo

nd

on

.

253

degree qualification can be obtained by amalgamating the four graduate feedback indicators. This can be done in exactly the same way as for the four market-based indicators (i.e. calculating the mean of the z-scores obtained for each of the four indicators). The results of this exercise are given in Table 6, which indicates that three subjects perform well for both males and females. These are: pharmacy, electrical engineering and law. In addition, geology/en- vironmental science scores highly for males and chemical engineering scores highly for females. The worst performer is civil engineering, followed by biology/botany and geography for males and zoology/physiology for females.

Combining market-based indicators and graduate feedback indicators

The question which arises as a direct consequence of constructing market-bas- ed and graduate feedback indicators is which subjects perform unambiguously well (or badly) on both sets of indicators. The answer is provided in Figures 1 and 2, which show how each subject has performed on market-based indicators and graduate feedback indicators simultaneously. For males, the best all- round performers are pharmacy, chemical engineering, electrical engineering, and maths/computing and law; and the worst performers are biology/botany, civil engineering, other arts, education and zoology/physiology. For females, the best all-round performers are law, business/economics/accountancy, maths/computing, pharmacy, chemical engineering and electrical engineering; and the worst performers are zoology/physiology, geology/environmental science, languages, other arts and English.

IV. Conclusion

The Government has made it crystal clear in various publications and minist- erial statements that it expects the higher education sector to pay more attention to the needs of the economy when deciding on the places to be offered in each subject area. Exactly which indicators are to be used by higher education planners in deciding on the allocation of resources between subjects has not, however, been clarified. The main purpose of this paper has been to investigate the possibility of constructing such indicators from available data. The question of what weights to attach to the individual indicators has not been addressed.

Two sets of indicators have been constructed. The first is based on labour market indicators and the second is based on feedback from graduates (six years after completing their degree) about the value they themselves place on their degree qualification. In order to measure the relative success of graduates

254

Labour marke t

indicator

2.0+

,,

,,

1.0+

,,

,,

0.0+

,,

',

-1.0+

,,

20

18

1

14

9

25

17

12

19

6 21

16 8 3

24 22 13

10 23 11

I 15 ........ + ......... + ......... + ......... + ......... + ........

- 0 . 6 0 - 0 . 3 0 O. O0 O. 30 O. 60

Graduate feedback indicator

Key to subject groups: 1. Education; 2. Pharmacy, other health; 3. Chemical engineering; 4. Civil engineering; 5. Electrical engineering; 6. Mechanical engineering; 7. Other engineering; 8. Agricul- ture and related; 9. Biology, botany; 10. Zoology, physiology; 11. Biochemistry; 12. Maths, computing; 13. Physics, maths/physics; 14. Chemistry; 15. Geology, environmental science; 16. Other science combinations; 17. Business, economics, accountancy; 18. Geography; 19. Law; 20. Other social sciences; 21. Architecture, planning; 22. English; 23. Languages; 24. History; 25.

Other arts.

Note: Each indicator is the mean of the z-scores computed for the labour market indicators and graduate feedback indicators given in Tables 3 and 4. Each z-score is signed such that a positive

value indicates a favourable score.

Fig. 1. Labour market indicator v. graduate feedback indicator for male graduates.

with different degree qualifications in the labour market, four labour market variables were constructed for graduates in each degree subject. These are: the graduate unemployment rate, salary levels, the growth of salaries over time and the proportion of graduates working abroad. The graduate feedback indicators were constructed from answers given by graduates to questions relating to whether their degree had helped them to obtain an interesting job or a good salary or to become a widely educated person. They were also asked to say whether they would do the same (or a similar) course again. The

255

Labour marke t

i n d i c a t o r

2 .4+

,,

1.2+

; 4

0.0~

,,

- 1 . 2 + 10

,0, . . . . . . . . . a e . . . . . . . . . .

- 1 . 2 0 - 0 , 6 0

19

12 17

14

8 - - 1 6 21

? 20 241 11 B

2 2 6 9 1 13

25

23 15

5

3 - -

0 .00 0 .60 I . 20 1.80

Graduate feedback i n d i c a t o r

Fig. 2. Labour market indicator v. graduate feedback indicator for female graduates. (See Figure 1 for explanation.)

indicators based upon graduate feedback therefore provide an added (and important) dimension to indicators based upon the success or otherwise of graduates in the labour market since they provide some indication of the value which the graduates themselves place upon their degree qualifications.

When the indicators of the success of graduates in the labour market are considered simultaneously with the indicators based on graduate feedback, we find significant differences between subjects for males and females. The subjects with the lowest scores on both indicators for male graduates are" biology/botany, zoology/physiology, civil engineering, other arts and edu- cation. The poorest performers for female graduates are: zoology/physiology, geology/environmental science, languages, other arts and English. On the whole, the best performers on both indicators tend to be in technological and vocationally-related subjects: chemical engineering, electrical engineering, law and maths/computing out-perform all other subjects.

The fundamental question which arises from attempts to quantify the relative success of graduates in different subjects is whether the kind of

256

information discussed in the present paper is sufficiently reliable to sustain the construction of efficient performance indicators. Such indicators should be treated with the utmost caution for two main reasons. Firstly, they were constructed from data relating to only a single cohort of graduates (i.e. those graduating in 1980) and the results will date very rapidly. Secondly, there is a heavy reliance on labour market indicators and this means that the wider social and cultural benefits of degree qualifications have been ignored. Ideally, the full social costs and benefits of providing places on degree courses in each subject area need to be estimated. It would be highly irresponsible to base resource allocation decisions on the narrow range of indicators included in the exploratory exercise reported in this paper. Far more information is needed.

Notes

* The author is grateful to the ESRC for supporting the research reported in this paper, which is part of a larger project on the construction and evaluation of performance indicators in higher education.

1. The age participation rate is the number of home initial entrants to full-time higher education expressed as a percentage of the relevant age group (i.e. the number of 18 year olds plus the number of 19 year olds divided by 2).

2. See Osbourne (1989) for a recent attempt to estimate the marginal cost of a student in the polytechnic sector.

3. A recent example is provided by the Polytechnic and Colleges Funding Council, which "bowed to government pressure to maintain funding levels for engineering courses, even though the numbers of engineering students is continuing to decline." (Financial Times, p. 12, 23/6/89).

4. See Williams (1985) for a discussion of vocationalism in higher education. 5. Taylor and Johnes (1989) discuss the drawbacks of using information describing the first

destination of graduates (after their graduation) as an indicator of future career prospects. For an alternative view, see Tarsh (1988).

6. The National Survey of 1980 Graduates and Diplomates was funded by the Department of Employment and DES and undertaken by Social and Community Planning Research during 1986.

7. The z-score is defined as follows:

x i -X Z / = - -

S

where: Xi = actual value of indicator X for subject group i, X = mean value of the X i values, S = standard deviation of the X, values.

8. This assumption could be modified such that each indicator carried a different weight. How the differential weights should be estimated is a question still to be answered.

References

Department of Education and Science (1985) The Development of Higher Education into the 1990s, Cmnd. 9524 [Green Paper].

Department of Education and Science (1987) Higher Education: Meeting the Challenge, Cmnd. 114 [White Paper].

257

Department of Education and Science (1989) Shifting the Balance of Public Funding of Higher Education to Fees, A Consultation Paper, April 1989.

Osbourne, M.J. (1989) 'On the Marginal Cost of a Student in the Public Sector of Higher Education in the U.K.', Journal of Further and Higher Education, Volume 13(1), Spring, pp. 55--65.

Robbins Report (1963) Higher Education, Command 2154, HMSO, London. Tarsh, J. (1988) 'New Graduate Destinations and Degree Class', Employment Gazette, July,

pp. 394-413. Taylor, J. and Johnes, J. (1989) 'An Evaluation of Performance Indicators based upon the First

Destination of University Graduates', Studies in Higher Education 14, pp. 201-217. Williams, G. (1985) 'Graduate Employment and Vocationalism in Higher Education', European

Journal of Education 20, Nos. 2-3, pp. 181-192.