What graduate degree would maximize earnings with a B.S. Physics?

[Shackleford]

Excluding medical school.

 

[TMFKAN64]

excluding medical school.

A J.D. degree.

 

[twofish-quant]

You can apply physics concepts to this question...

There is an mathematical theorem that called the no-arbitrage theorem that says that given certain assumptions about a market, that the expected outcome for all choices are the same.

The idea is that suppose you find that degree X makes you more money than degree Y. Everyone will get degree X, no one will get degree Y, so salaries for degree X decrease, salaries for degree Y increase, so in the equilibrium situation the expected outcome from degrees X and Y will be the same.

What you will find that's important is the relaxation time. How long does it take for the market to go into equilibrium? In the case of stocks, it can be seconds. In the case of the labor market, it may take years for things to reach equilibrium and you can end up with all sorts of non-equilibrium things like bubbles. However, even if the relaxation time could be years, your career is measured in decades.

Also one question that you want to ask yourself is 'do you really want to maximize earnings?" For example, if you have higher earnings but more debt, is this good or bad? Also, increasing earnings is often associated with higher risk and volatility.

The other thing that you really need to ask yourself is "how much money is enough?" At what point do you declare victory and say that you've made enough money and you are willing to make less money in exchange for something else?

One thing that I did which was really useful was that at one point in my life, I added up everything that I wanted and came up with a dollar figure at which I'd declare victory.

 

[Chronos]

Engineering is a good choice.

 

[Shackleford]

I'm considering engineering. I would have to decide what I would like to build or manage. What about non-technical degrees? I should have put excluding M.D. or J.D., even though people say I would be a good lawyer. lol.

 

[Shackleford]

You can apply physics concepts to this question...

There is an mathematical theorem that called the no-arbitrage theorem that says that given certain assumptions about a market, that the expected outcome for all choices are the same.

The idea is that suppose you find that degree X makes you more money than degree Y. Everyone will get degree X, no one will get degree Y, so salaries for degree X decrease, salaries for degree Y increase, so in the equilibrium situation the expected outcome from degrees X and Y will be the same.

What you will find that's important is the relaxation time. How long does it take for the market to go into equilibrium? In the case of stocks, it can be seconds. In the case of the labor market, it may take years for things to reach equilibrium and you can end up with all sorts of non-equilibrium things like bubbles. However, even if the relaxation time could be years, your career is measured in decades.

Also one question that you want to ask yourself is 'do you really want to maximize earnings?" For example, if you have higher earnings but more debt, is this good or bad? Also, increasing earnings is often associated with higher risk and volatility.

The other thing that you really need to ask yourself is "how much money is enough?" At what point do you declare victory and say that you've made enough money and you are willing to make less money in exchange for something else?

One thing that I did which was really useful was that at one point in my life, I added up everything that I wanted and came up with a dollar figure at which I'd declare victory.

The no-arbitrage theorem is unrealistic for a number of reasons.

I don't necessarily have a dollar amount. I was just wondering, theoretically, excluding certain degrees, what graduate degree coupled with a B.S. Physics would maximize earnings.

 

[Ben Espen]

It also depends on what you are good at. The best way to think of this is an earnings/ability distribution. In general, the better you are at a given job, the more you are going to make. Exceptions clearly exist! Be careful, but you should consider: would you be a good lawyer or fail the bar? This makes a huge difference in earnings. You want to try and pick something you can do well if you have the choice. I have worked as a manufacturing engineer for years, which is one of the lower paid engineering disciplines, but I am at the top of the distribution, which means I do quite well.

 

[Shackleford]

It also depends on what you are good at. The best way to think of this is an earnings/ability distribution. In general, the better you are at a given job, the more you are going to make. Exceptions clearly exist! Be careful, but you should consider: would you be a good lawyer or fail the bar? This makes a huge difference in earnings. You want to try and pick something you can do well if you have the choice. I have worked as a manufacturing engineer for years, which is one of the lower paid engineering disciplines, but I am at the top of the distribution, which means I do quite well.

So, basically, pick something I enjoy doing and since I'll probably excel at it, I'll be well compensated. I think I've heard the adage follow your passion and the money will follow, too.

 

[G037H3]

Well, you can choose to go for something you *know* you'd enjoy doing for a decade or more, or you could go after what pays better on average, and then risk burning out or being unsatisfied, and the lack of contentment with your career being a constant stressor that reduces the available energy you have to commit towards doing something you *want* to do.

It's generally best to worry more about happiness than money. If you even have a BS, you likely aren't going to starve, so why not focus on what you find to be fun and interesting?

 

[Shackleford]

Well, you can choose to go for something you *know* you'd enjoy doing for a decade or more, or you could go after what pays better on average, and then risk burning out or being unsatisfied, and the lack of contentment with your career being a constant stressor that reduces the available energy you have to commit towards doing something you *want* to do.

It's generally best to worry more about happiness than money. If you even have a BS, you likely aren't going to starve, so why not focus on what you find to be fun and interesting?

That's a good point. I've expressed the issue in other threads of mine that there's nothing that really stands out as far as a career, so part of my problem is deciding on something I'd enjoy doing for a decade or more. Some people choose careers based on money. They're motivated by just making a lot of money regardless of what they do. However, I know there are some things I do not want to do regardless of the money, e.g. medicine, law, etc.

 

[Ben Espen]

So, basically, pick something I enjoy doing and since I'll probably excel at it, I'll be well compensated. I think I've heard the adage follow your passion and the money will follow, too.

This would not be my advice. Prudent reflection on earning a living is an important part of life. Making a career decision based solely on money is unwise, but so is ignoring money. There is absolutely no guarantee that you can make a living doing solely what you like to do. Any likely career will involve at least some unpleasant aspects, and potentially many. This is normal, and it can be successfully overcome by almost anyone.

 

[Locrian]

Yea, what Ben said. I know a lot of people who did what they loved until they were dead broke and changed careers. The money doesn't always follow.

 

[twofish-quant]

The no-arbitrage theorem is unrealistic for a number of reasons.

If you regard it as a rough model of the world (i.e. like any other physics model), I've found that it actually describes things pretty well.

 

[twofish-quant]

Some people choose careers based on money. They're motivated by just making a lot of money regardless of what they do.

This can be quite dangerous because usually people don't give you the cash upfront. They give you a *promise* of cash, and if you turn off your mind, you get into debt, and when it comes time to pay up, the cash doesn't appear. If you are driven by money, you may find yourself swimming with other people that are also motivated by money, and unfortunately, they often make a lot of money by squeezing you. So you work like a dog to make someone else rich with the idea that you will be rich too, and somehow they end up with the loot.

Money can be quite tricky, and you be careful that you are asking the right question. It's surprising (or maybe not) how many people that make insane amounts of money end up dead broke, or how many people that make modest amounts of money end up quite wealthy.

In particular, you have to very carefully consider the amount of debt that you want in order to have the promise of cash. Personally, I'd rather make $75K, spend $60K/year, and have zero debt than be in a situation where I make $1M/year, spend $1.2M/year and have $500K in debt.

Once you factor in risk and debt, I find that the no-arb theorem works pretty well in labor markets.

 

[twofish-quant]

Yea, what Ben said. I know a lot of people who did what they loved until they were dead broke and changed careers. The money doesn't always follow.

I've also seen people that make absolutely crazy amounts of money, and ended up dead broke anyway.

Money is a really tricky thing, which is why I just love a job where I spend the whole day thinking about it. Curiously, I hate spending the stuff.

 

[twofish-quant]

There is absolutely no guarantee that you can make a living doing solely what you like to do.

It helps to figure out what you really would like to do. The broader your definition of "fun" is then the more likely it is that you'll find something that's both fun and profitable.

Also, it helps to figure out what you really *want*.

It seems obvious that you get what you want by maximizing income, but its dangerously wrong. If you want to feel like a king, you are going to be miserable if you make $200K, but everyone around you makes $500K. If you want positive net worth, then its not going to work to make $200K if you go into massive debt to do it.

 

[twofish-quant]

Also if you are talking about total expected net lifetime earnings, my guess is that a physics Ph.D. will beat anything else.