In July, 2015, I was at the Pan IIT Conference in Santa Clara, US. In one of the chat session, the legendary Vinod Khosla said something close to my heart. Let me paraphrase him and change the context from Silicon Valley to India:
"It is understood that you need
to live comfortably, that you would want to rent a decent house, and
eventually buy an apartment, that you would want to buy a car, have all
the modern amenities in your home, take care of all your
responsibilities like childrens' education in good places, supporting
parents in their old age (including their medical bills), save some for a
rainy day, have a vacation every year, and you can add a few more
things that you really want to enjoy. This will translate to securing a
decent job after your education. But once you have achieved all this,
what next. Would you want the second house, a third car, a fourth
iphone, more jewellery, and so on, or would you then think of jobs that
you enjoy doing. May be the job that you like is also the job that gives
you lot more money. But if there is a choice between doing something
not so enjoyable but getting lots of money, and doing something that you
enjoy and still getting money greater than your threshold for
comfortable life, what would you prefer."
I am sure, if
the question is asked in this fashion, most people would say that they
would follow their interest once they are reasonably secure financially.
But do they mean it.
In our country, someone starting
with a salary of 4-5 lakhs and a decent growth (say, 5% more than
inflation) would mean that everything that we have written above could
be done very easily. In fact, one could start at even lower figures and
grow from there. And pretty much every discipline in any good institute
would enable a good student to get these levels of jobs. So the
placement question that every parent is so interested in should really
boil down to whether the median salary of the graduates is more than 4
lakhs or not. And beyond that, the student should be free to decide the
program and college. But we all know that is not the case. Parents and
students are easily excited about large salaries and do not even attempt
to figure out what they might like.
Often, the goal is
to earn the maximum. The optimization function is the money to be
earned over the next 50 years. Unfortunately, this function is very
difficult to compute. We don't even know what jobs and careers would be
there 10 years from now, what to talk about 50 years. An average person
will not remain in the same career for so long, and indeed people change
careers every 10-15 years. So what is needed for success is not a
particular discipline, but the ability to learn new things. Even if you
happen to be in a low paying career in the beginning, when the time
comes to change your career, you could then pick up a better paying
career, if you had the ability to learn. On the other hand, if you do
not pick up the ability to learn, being in the highest paying career is
of no use if you are going to lose that job in 10 years.
from monetary point of view, one should look for education which gives a
decent start and prepare you for change of careers (or teaches you the
most important skill of self-learning). Again, it would seem that pretty
much any discipline in any good institute would meet this requirements.
it is pretty obvious to anyone that earnings over the next 50 years are
impossible to compute, parents use a proxy. The first month's salary.
The assumption is that if the first month salary is high, it would be a
strong indicator of higher lifelong earning. That is a huge leap of
faith, since as we just said we don't even know what kind of jobs will
be there after 10 years.
Let me give you my example.
When I was in my final year, and was applying for higher education, the
hottest areas were theoretical computer science and Artificial
Intelligence (which at that time was really about search and expert
systems). I had thoroughly enjoyed the course on Networking and wanted
to pursue that. Each of my well wisher advised me that I should write
TCS/AI in my statement of purpose, but I was adamant. It had to be
Networking. I was lucky to get admission in a good school (UMCP). And I
did my PhD in Networking. By the time I finished, all the smart folks
were competing for a diminishing number of jobs in TCS/AI and there were
extremely few networking PhDs. I got a job in IIT Kanpur, which was
considered the best CS department in India at that time, where around
the same time, we rejected the applications of PhDs from top departments
of the world in TCS/AI, since there were just so many of them. If you
were in networking in 90s, the industry lab to work in was Bell Labs,
and I could get a visiting position there for a semester. Not having to
compete with an army of smart people has helped me a lot in my career.
And those who only looked at what is the current favorite actually were
so disappointed with the job market, many of them had to change their
careers right away. And, of course, today, the networking is no longer
hot. One should have morphed into a security expert, or a cloud expert
or an IoT expert, or something else.
So, if we
don't know what jobs we will be doing 10 years from now, we can not take
it for granted that high first month salary will necessarily mean high
income over 50 years
But, the first month's salary is
important to parents. The next issue is that even if you know exactly
what salaries have been offered to everyone in the graduating batch, how
do you know what will your ward be offered 4 years from now. Let us
consider two programs, both having 10 graduates. In one program, each of
those 10 graduates has a job with a salary of Rs. 10 lakhs per annum.
In the other program, there is one graduate with a salary of Rs. 1
crore, another one with a salary of Rs. 10 lakhs, and the remaining 8
with salaries of Rs. 2.5 lakhs each. So the average of the first program
is Rs. 10 lakhs, and the average of the second program is Rs. 13 lakhs.
On the other hand, median of the first program is Rs. 10 lakhs, while
that of the second program is Rs. 2.5 lakhs. I can bet that most people
will select the second program. My son is the best in the world, and
will certainly grab that Rs. 1 crore job. Never mind that since most
parents think like that, the competition would be much tougher in that
program. So to guess their first month salary, people often look at the
highest salary, and if they are a bit more grounded in reality, then
average. Hardly anyone ever asks median and hardly any college will give
In summary, the way things get decided are as follows:
1. The optimization function is maximum earning over the lifetime.
Since that is not easy to compute, assume that the first month salary
would be strongly correlated with the lifetime earnings.
first month salary is also difficult to guess, assume that the highest
salary offered last year would be offered to your ward (suitably
enhanced, of course) 4 years hence.
4. And hence the program which had the highest salary package offered last year is the one we want to join.
If the algorithm is so simple, why are parents confused. Well, there are multiple reasons:
1. Do we really know the placement data. (Usually, No.)
2. What happens if the data for the last two years is contradictory (which is often the case).
Continuing with 2, will the relative ordering of programs change over
the next four years. (That is, if Program 'A' had one student who was
offered 100L, and program 'B' had one student who was offered 99L, is it
possible that 4 years from now, there would be one program 'B' student
who would have a 100L offer, while the highest offer in Program 'A'
would be 99L.) Of course, it will happen.
4. The ordering
based on highest salary is different from the ordering based on
averages, which is different from the ordering based on median. Which
one to adopt, particularly when most of the data in public domain is
5. Other unknowns.
There is a
simple solution that will take care of all your stress. Read the second
paragraph again, and convince yourself that beyond a reasonable salary,
you wouldn't worry about placement. Stop being a rat. Become a human.
And you would be astonished as to how you will actually be able to think
of your interests. You will actually be able to think of what you want
out of college. And then choosing a college will become that much
I was talking to a philosophy professor a few
days ago and discussing this issue of stress during admission season. He
told me that the problem of decision making is that a lot of people
want to solve an unsolvable problem, and since the problem is
unsolvable, they are stressed because they are investing time and effort
without any result. If people start focusing on what is possible they
will be able to take better and quicker decisions.
Also, as this excellent article by Hunter Rawlings in Washington Post
points out, "The value of a degree depends more on the student’s input
than on the college’s curriculum." Hard work is a more important key
than the college itself. So if you are confused, just toss a coin.