Does Your GPA Actually Matter?

Does Your GPA Actually Matter?

An Analysis of the Opportunity Costs of Studying in College

by Maniza, Linh-Lan, Geena and Sukanya

Opportunity costs are the benefits you must forgo in order to pursue an alternative choice. “What do I have to give up in order to get this?” is a common question in all of our minds. In college, students come face-to-face with many opportunity costs throughout the day, because there just aren’t enough hours in the day to do everything. Time is a scarce resource, and college students everywhere learn quickly that how they allocate their time affects their college experience. While studying enough hours is an important step to academic success, there are other successes to be accomplished during college within work experience, extracurricular activities, and friend circles. Time needs to be allocated efficiently in a way that satisfies a college student’s wants for optimal happiness.

College students may find it easier to use marginal analysis while deciding on how to allocate their time efficiently. In economics, marginal analysis is an examination of the additional benefits of an activity compared to the additional costs of that activity. Marginal analysis serves to allocate a scarce resource like time efficiently.

For example, for every extra hour that a student spends working, her additional benefit is the money that she earns from her current work in the short run. Her additional opportunity cost is the time she could have spent studying for her courses. The time she forgoes by not studying could have been spent on studying harder and achieving a higher GPA. Holding all other variables constant, better grades in college would increase her chances of getting a high salary job in the long run. On the other hand, for every extra hour that a student spends studying, her additional opportunity costs would be the income she forgoes by not working. Her additional benefit would be more time to devote towards getting a higher GPA and a better job in the long run.

So, while deciding on what to do with an additional hour, the student needs to weigh both the costs and benefits of an activity and reach a decision where the benefits outweigh the costs. A trade-off between costs and benefits in the short term versus the long term is also observed. Time management is a crucial factor here. The student should utilize time in such a way so that her net bundle of activities in a certain day (i.e. how much time she chooses to devote towards studying, working, or other activities) would render more benefits than costs.

The trick is to identify the costs and benefits properly, and sometimes the costs and benefits associated with a particular activity are hard to determine. For example, the benefits of not studying and forgoing additional study hours could mean that the student is devoting those hours to productive extracurricular activities like working in the student newspaper or participating in the debate society. These activities could in turn contribute towards her future career goals. Thus, this time devoted to pursuing an extracurricular activity may actually benefit the student’s future goals more than if she just spent her time studying. Obviously, the nature of the activity should be taken into account and compared to the student’s future goals.

In some instances, a student’s extracurricular activities at school may conflict with her study schedule. This means that there is an opportunity cost in participating in school organizations. However, depending on what a student would like to do after she graduates, the benefits of participating in a club may actually outweigh the costs of lost study time.

For example, if a student would like to enter the field of journalism, it may be better for her to write for the school newspaper or volunteer at the writing center. This means that she would give, or allocate, some of her time to these various activities. While she may not always have enough time to study for an exam or attend a review session, the benefit of some “real world” work experience may actually make her better off in the long run. In the short run though, she may have to forgo getting an “A” in every class.

But, when the student graduates from college, she may actually be more employable than a student who had a perfect GPA but no extracurriculars. This is because the student who wrote for the school paper or volunteered for the writing center better understands the field in which she is working.

While it’s important for students to be productive during their college years, continually studying, working, or participating in an activity can become tedious. For a college student, socializing is also an essential aspect of her life. Although gathering, chitchatting or hanging out with friends seem trivial at first, the experience of creating a network for yourself is extremely valuable. So often there are successful stories about college students who get hired immediately after graduation by a large firm or organization. Their secret to success somehow includes knowing someone important in the company, or just gaining trust and confidence with the interviewer. Such interpersonal skills are trained and sharpened nowhere else but in quotidian life.

Moreover, for careers that involve interacting with other people (such as politicians, lawyers, speakers, social workers, and even scientists), the ability to socialize and connect with others is even more favorable and beneficial than theological knowledge. Similarly, just being collaborative and amiable with colleagues brings about happiness in the classroom and workforce environment. Hence, for a college student, sacrificing a few hours of studying to just relax with others and traveling to different places not only relieves stress but also enhance her own personality and chances of being successful in the future.

All of these different options on how to spend your time in college can be overwhelming for students. Most, if not all, college students want to maximize their utility—they all want to make choices that will allow them to enjoy optimal wellbeing. In order for them to do so, students perform cost-benefit analyses all the time (without even realizing it). It is important to note that these analyses can be subjective, based on the student’s preferences. Students have different preferences when it comes to “making the most out of college,” because whether a choice is rational or not depends on the decision maker. Every college student’s time management is different, so every one will do different things depending on whatever makes her happy.