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We all know Harvard students are obsessed with prestige. From final clubs to competitive comps, we seem to gravitate toward arbitrary standards of success in order to preserve the luster of our status as Harvard students.
This rat race becomes particularly apparent when recruiting season rolls around and students flock to career fairs. Nearly one third of graduating Harvard students in 2023 ended up choosing between three high-prestige fields: finance, consulting, and tech or engineering.
Several simple concepts from behavioral economics can provide a useful framework for understanding the negative impacts of this prestige-driven job market.
Two “market failures” in particular prevent graduating seniors from making choices that might be better for them and society in the long run. First, imperfect access to information causes students to choose jobs that do not make them happiest. Second, certain jobs may provide enormous personal gain but simultaneously generate negative externalities that disadvantage others.
According to classical economic theory, governments should intervene to correct for market failures, often either by implementing mandatory disclosure requirements to correct information asymmetries or by taxing socially destructive economic activities and subsidizing beneficial ones.
Of course, Harvard isn’t a government, but it does have a vested interest in the contributions that students make to society once they graduate. As such, Harvard can and should take similar steps to influence students’ choices.
Harvard students have claimed to have far easier access to information and guidance for prestigious jobs than lower-status alternatives. For instance, some feel as if Harvard has robust pipelines to careers in finance and consulting but lacks infrastructure to support aspiring school teachers. Information asymmetry thus creates a choice architecture that ushers students into a few industries, even when alternative occupations might be better suited to their skills or aspirations.
Despite the strong pre-professional culture, Harvard tends to shy away from explicitly encouraging students to pursue one career or another.
“Faculty sometimes avoid pragmatic conversations about post-graduate careers. By doing this, we cede those conversations to potential employers that might not have prosocial motives,” David I. Laibson ’88, an economics professor at Harvard, said.
As a result, recruiters have free rein to craft narratives about their firms and entice students to apply.
Informational barriers also arise when students fail to predict their future preferences. Students looking for their first jobs out of college likely have different preferences than their future selves. For instance, recent graduates might care about prestige today, but they might eventually prefer a job with a better work-life balance or higher social impact. If preferences vary over time, then recent graduates will undervalue the characteristics that their future selves prefer.
Both of these types of imperfect information prevent students from making the best career choice for themselves.
All jobs have spillover effects on the rest of society. Some of these externalities are positive. Professions in healthcare and education, for example, contribute to a healthier and more educated society. Other jobs, though, create negative externalities: Consultants at McKinsey helped Purdue Pharma “turbocharge” sales of oxycontin, contributing to the devastating opioid crisis. Some hedge fund managers take advantage of price inefficiencies in financial markets to generate high returns for wealthy stakeholders at the expense of ordinary traders on the other end of the transactions.
To be sure, some high-prestige jobs have enormous net social benefit — consider software engineers who develop useful applications or wealthy financiers who donate the majority of their income to charity.
Nevertheless, Harvard has a duty to encourage students to pursue socially positive careers and not to be simply focused on short-term conceptions of material wealth and prestige. Students, too, should reflect on their career aspirations.
“Here are three questions that I encourage students to consider. Does your work make other people better off? Does your work make other people worse off? Does your work align with your ethics?” Laibson said.
Just as governments can intervene to rectify market failures, Harvard as a quasi-governing body can help to correct distortions in students’ post-graduate career choices.
To reduce the information asymmetry between careers, Harvard should invest in developing more comprehensive pipelines and resources for students interested in careers that tend to have prosocial outcomes. As I have previously argued, prestige is malleable. Creating mentorship programs, organizing job fairs for alternative career paths, facilitating the campus recruiting efforts of nonprofits, and spotlighting alumni outside of high-prestige fields can all help shift the narrative, mitigating the perception that just a few fields are prestigious.
Behavioral nudges work. Even small educative interventions from governments, employers, and institutions meaningfully affect individual decision-making, research shows.
Correcting negative externalities is harder. At the very least, Harvard should do more to urge students to prioritize positive social impact in their career choices. For instance, we could imagine courses that treat careers as academic subject matters worth studying — perhaps by examining the positive and negative externalities of various careers in a more thoughtful manner.
As part of the General Education program, Harvard could incorporate classes that teach students how to navigate the ethics of everyday decisions that will come up in future workplaces. For example, students could learn how to equitably hire employees, donate money, and make business and investment decisions that focus on more than just shareholder value.
In addition, Harvard could experiment with financial subsidies for undercompensated but socially beneficial career paths. Scholarships, grants, and loan forgiveness could go specifically to students pursuing careers in sectors that have a high social return.
These aren’t outlandish ideas: Many law schools, in fact, already forgive loans for graduates who go into certain careers in public service.
“Certainly you want to provide an incentive to go to positive externality fields. And I think that there are certainly several fields — teachers come to mind — where the private returns are not as high as the social returns,” Miguel Palacios, a professor at the University of Calgary and an expert in innovative college financing techniques, told me.
For example, universities (or third parties) could implement a “pay it forward” program in which high-earning graduates pay a small percentage of their income into a pool that is then redistributed toward subsidizing specific undervalued careers.
We’ve already seen similar experiments. Social Finance, a nonprofit that helps pioneer novel financial solutions for social problems, recently partnered with the State of New Jersey to implement an initiative that provides zero-interest loans for participants to enroll in select industries. If, upon graduation, participants earn below a threshold salary, they repay nothing.
“In the New Jersey context, specifically, the Governor’s office identified clean energy, healthcare, and IT as three priority industries of focus, and there’s the clear societal benefit of having additional workers in the healthcare and clean energy spaces in particular,” Erin C. Thornton, a senior associate at Social Finance who works directly with the New Jersey Pay it Forward Fund, said.
“We’re partnering with employe[rs] to be able to create pipelines of priority populations into these different fields,” Jessica L. Kenerson, Director of Strategy at Social Finance, said.
“We might be able to influence learners going into these areas because of financial incentives or financial relief that we’re able to provide.”
These interventions are a start. But the important takeaway is that the career choices of college graduates shape the future trajectory of society. Thus, we cannot let market failures distort those decisions. Our choices aren’t made in a vacuum; they are made within a social context. And universities can and should work to change that context for the better.
Clarification: November 4, 2023
Jessica L. Kenerson reached out to clarify that Social Finance works directly with employers, not employees, to create professional pipelines into different industries.
Julien Berman ’26, a Crimson Editorial editor, lives in Adams House. His column, “Harvard’s Professional Pipelines,” runs tri-weekly on Fridays.
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