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I've been reading this question, whose premise is that going directly into industry after (presumably) just a bachelor's will make you more money than doing a PhD and then going into industry. To my surprise, most people seemed to agree with the OP.

My thinking has always been that, yes, going into industry with just a bachelor's will make you some money in the short term, but it will also:

A) Land you in a relatively low level position to start.

B) You will eventually hit a ceiling past which you cannot rise.

My thinking has always been that with a PhD you will start in a relatively higher position, and you will not hit a ceiling, so in the long run you will make more money. Why is my reasoning wrong?

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    Saw this article today which you might be interested in: ricemedia.co/culture-life-masters-programme It's for Masters degrees and not PhDs, but the same ideas should be involved. – Allure Aug 26 '19 at 21:54
  • Answers in comments and exentended discussions have been moved to chat. Please read this FAQ before posting another comment. – Wrzlprmft♦ Aug 27 '19 at 5:49
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    Maybe you want to specify the industry we are talking about: the situation may vary a lot. There are sever factor you haven't mentioned: 1) There is an opportunity cost as the job market for PhDs are much smaller than for MScs, and much less flexible where they can get a premium for their extra degree. 2) Also for many, going to Ph.D. is not a short time. 2b) it is especially not that short if you consider that in technology is a rapidly moving field and hard to predict what will be hot from 5-10 years from now. – Greg Aug 27 '19 at 9:21
  • One difficulty of comparing average salaries is that you have to control for the job. Among me and my colleagues, when looking for an industry position, we much prefer an interesting job over a well paid one. The amount of financially driven people amongst those that choose not to do a PhD is higher, which skews the averages. – Davidmh Aug 27 '19 at 9:30
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    What discipline? In what speciality? From what college? Accredited or not? Instructed in what language? Not all PhDs are created equal, by any means. A liberal-arts PhD from an overpriced, unaccredited foreign college bears almost zero comparison with a PhD in CS or mathematical physics from a top institution. The question is way too vague. – smci Aug 27 '19 at 18:11

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I don’t have experience in industry myself, but know several people who do (and have made the transition from industry to academia and vice versa).

Broadly speaking, getting a CS PhD in the USA with the intent of switching to industry after will result in about $500k in lost wages. This is accounting for about 5 years of PhD salary vs programming salary, raises, bonuses etc. The jobs that necessitate a PhD in industry are few and far between, and are highly competitive. Thus, starting a PhD with industry in mind, and assuming you’ll get that job is, statistically speaking, unrealistic. There are still many good reasons to still do it!

  1. It’s a fun and fulfilling endeavor that offers you a chance to think freely about things you care about for 5 years!

  2. If you are entrepreneurial then I know some people who start companies based in their PhD work.

  3. If your undergraduate degree isn’t in computer science then your PhD can be treated as a semi vocational degree (though granted a masters will do as well)

  4. If you’re interested in moving to the USA then a PhD offers a path to permanent residence.

  5. You like research and want to leave the door open to academia. In that case a PhD is a must.

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    @SquaringtheCircleisEasy Given that thousands of people are still getting a PhD every year I can assure you the PhD is not "unrealistic" - it's maybe not the right option for you and many others, but there are still people for which doing a PhD is just what they want and should do. – xLeitix Aug 26 '19 at 10:29
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    @SquaringtheCircleisEasy your comparison is between an average PhD and a super-excellent post-undergrad situation. It's not a fair comparison. – Martino Aug 26 '19 at 10:55
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    @SquaringtheCircleisEasy Your friend, given that income, would be in the top 1-2% of households for income in the US - when adjusted for age and level of education, they would probably be in the top 0.1% of comparable individuals. Most people - to say, more than 99% of people - will not experience anything remotely like that, PhD or not. It's a bit like deciding on whether to pursue a PhD based upon the experience of Larry Page and Sergey Brin. Outliers exist, and are important to consider, but they are not the norm. But hey, if someone gets a 250k+ offer, take it :D – BrianH Aug 26 '19 at 13:34
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    I agree with all your points (+1), however your example from CS is just too specific to make a general statement. Some PhDs might earn much more than a Bachelor with work experience, others don't. – Ian Aug 26 '19 at 13:38
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    While recognizing that data is not the plural form of anecdote, I can confidently add that my CS PhD was financially irresponsible. I have access to other opportunities with the PhD, of course. However, the financial value of those opportunities don't outweigh five years of "lost wages". – Throwback1986 Aug 26 '19 at 15:49
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Getting a PhD is not financially irresponsible¹.

Your career earnings may be less, or may be more, than without a PhD. Whether this is the case depends on too many factors to be answerable without details. It shouldn't matter too much.

If you earn enough to finance the present and future life of yourself and your dependents, then you are not being financially irresponsible.

With a PhD, you can perfectly well finance the present and future life of yourself and your dependents, therefore getting a PhD is not financially irresponsible². A PhD is not a recipe for unemployment and homelessness.

Examples of financially irresponsible behaviour

  • Getting a loan and spending it on consumer electronics, vacations, expensive cars, or gambling.
  • Spending your salary in the pub as soon as you get it, leaving your kids go hungry and failing to pay the bills.
  • Spending savings, inheritance, or lottery winnings within a few years without having a stable job.

Examples of financially responsible behaviour

...or at least examples of behaviour that are not, by themselves, financially irresonsible:

  • Getting a job that earns less (but enough) but makes you happier than otherwise.
  • Getting a PhD and enjoy life or a research career while still earning enough to pay the rent ones entire life.
  • Declining a promotion+raise because one doesn't want to perform the duties or have the responsibilities associated with the new role.
  • Making a career as an artist earning very little, but correspondingly spending very little, in a country with a strong social safety net and quality free public healthcare and education (including tertiary education).

I earn more than I need (in a position that requires a PhD) and I have no clue what I would do with the money if I earned much more. I still have plenty of savings from the salary I earned as a PhD student. Plenty for my needs and wants. Nobody should need €100k+ per year except in places where real estate prices are extremely high (many people may want more, though), but in those places highly skilled people should be able to find jobs that pay enough to pay the rent too — including if you have a PhD — or one can look for a job elsewhere.

¹Self-funding a PhD can be financially irresponsible if it puts you (massively) into debt and causes difficulties to make ends meet. I believe self-funding a PhD is very rare (I've never met a self-funded PhD student) but I do not have the data and academia varies more than I think, so maybe it's not always as rare as I believe it to be.

²I don't have data on PhDs in all fields and I don't know how much, for example, a humanities PhD may earn; but I would be surprised if a PhD increases the risk of poverty compared to a humanities BA or MA. In this case, it of course makes a difference where you do your PhD.

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    Great answer. Financially responsible does not mean picking the most money all the time. – Jack Aidley Aug 26 '19 at 9:57
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    @gerrit : Not even any opportunity cost from lack of experience? (But of course, a civilized system like that is going to be a lot better than one where you have to take out huge loans to pay for education.) – Martin Bonner supports Monica Aug 26 '19 at 14:28
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    @Spark Not at all. I'm not trying to calculate career time earnings for either CS, applied math, humanities, or any other. The question was not "does getting a PhD statistically increase or decrease lifetime earnings", the question was "is it financially irresponsible". Decreasing lifetime earnings is not financially irresponsible, as long as one spends less than one earns. – gerrit Aug 26 '19 at 14:48
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    I agree that you are strictly speaking answering the question. Perhaps it's because the question is not as accurately phrased as it can be. However, I feel like in my field, recruiters tend to spin fairy tales about the amazing industry prospects that a PhD offers, which are completely detached from what actual industry people say, and completely ignore the effect of additional 5 years of extra income/industry experience. We should be honest with graduate students about what they're missing out on, as well as what they're gaining. – Spark Aug 26 '19 at 15:16
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    @Spark Nobody ever recommended me to get a PhD for industry/career/earnings reasons. Maybe this depends on the field or maybe some institutions are more, say, "aggressive" / dishonest in their PhD student recruitment drives? My advisor told me that a PhD was required working in academia but usually optional working in industry, but that he didn't know enough about industry careers in practice to advice anything more specific about the latter. – gerrit Aug 26 '19 at 18:52
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Your assumptions are questionable

Let's take a literal look at the assumptions you make there.

A) Land you in a relatively low level position to start.

The appropriate point of comparison is not at the point of "start" determined by the decision to get a PhD, but at some fixed point of time - for example, the time when you'd start working after getting a PhD. By that time the equivalent bachelor's student would have had something like five years of experience, raises and promotions - and if they'd put in as much learning and work as a PhD program requires, I'd expect that position to be comparable or better than what a PhD graduate can get as their first job offer.

B) You will eventually hit a ceiling past which you cannot rise.

This is simply not true. The majority of career paths (except regulated professions e.g. medicine and law) do not require an advanced degree even in cases when one might be helpful, and someone starting with a bachelors degree generally can progress to the very top either through work experience, or by getting a masters later in life while working.

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    I've also heard of people in companies that required degrees for promotion, who got a recommendation to join some "degree factory" where for a low five digit sum you can get a real, but totally worthless, but real degree - so the company can then promote them. – gnasher729 Aug 26 '19 at 18:35
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    I'm not sure this is quite the right framing. It's true that PhDs are required for a very small fraction of jobs, but a person willing and able to get a PhD is also likely to be disproportionally interested in those jobs. If you want to run your own research projects, almost all paths go through a PhD. – Matt Aug 26 '19 at 19:23
  • The field does matter a lot. If you want to be a software engineer, it doesn't really matter. There is a bunch of great software being written by people who are just passionate in solving their problems and don't care so much about the degree and 'useless' courses. They're arguably more employable than someone with a PhD who never finished a real-world project. So A) and B) are both invalid at least for this field. – Dylan Meeus Aug 28 '19 at 8:56
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This question can't be answered without the details. How much do Bachelor's degree holders earn in your field / locality? How much do PhD degree holders earn? What jobs are enabled by a PhD that someone with just a Bachelor's degree cannot do? It's certainly possible that people with PhDs earn more, but remember you also invest time into the PhD that you won't get back, and because of exponential growth in savings/debt, this can mean you're better off starting to work immediately.

Once you know the answers to these questions, you can run calculations such as this (which is for a different situation, but the same concepts apply) to find out whether it's indeed financially irresponsible. Without the answers, this question is also unanswerable.

Example of how variable the answer to this question can be:

The research shows that Bachelor, Masters and PhD graduates in Humanities — who studied History, Geography Philosophy or Politics — all end up on the same salary, suggesting Masters and PhD students did not see a return on their investment.

In fact, PhD graduates in these subjects earn less on average — £40,000 ($58,000) — than Masters students, who earn £44,000 ($64,000).

Physics, Chemistry, Life Sciences and Healthcare PhD’s also don’t do much to raise pay, with just a £4,000 ($5,800) difference.

Conversely, PhD or Doctorates in Maths, Computer Sciences, Law, and Psychology graduates earn much more than those who only did Masters in the subjects.

PhDs in Mathematics and Statistics earn twice as Bachelor degrees alone — £112,000 ($162,000) — with 78% of PhDs graduates working in the financial and consulting industries.

If you're thinking of doing a PhD, do yourself a favor and study the job market before committing to the PhD.

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  • I think even within maths, there are some that has terrible prospects (such as pure math with no programming), and some with very good prospects. It is very difficult to say. But nowadays programming is paying so much, even for highschool students, anyone who is doing a graduate degree is likely to lose out on years of wages that he or she will never earn back. I know PhDs who earn less than some privileged highschool students. It is the crazy world we live in. – Cauchy's Carrot Aug 26 '19 at 7:59
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    I don't know if these statistics for physics differentiate between academic and industry careers, but in any case they are contradicted by data from from the American Institute of Physics. According to the AIP, new physics BS graduates start around $45-75k in the private sector, while new physics PhDs start around $85-120k in the private sector. – Danny Aug 26 '19 at 15:26
  • @Danny it's certainly possible. The website is a .au website, so maybe the data only applies to Australia, or perhaps (since it quotes figures in pounds) it only applies to the UK. If so, that just means the answer is even more variable. – Allure Aug 28 '19 at 12:45
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While the comments of user Patricia Shanahan are instructive, I'll try to give a bit more perspective.

A PhD is training to do research. In most fields it is theoretical research, and in a few (applied math) it is applied research. Many large companies (IBM, Google, ...) have quite large research divisions. Some of them do theoretical research but the trend has been (last 20 years or more) toward product focused applied research. But the people that hold positions in these divisions need to know how to do research and so a PhD is the more appropriate training.

A person who enters such a company with only a BS or MS has had much less, if any, real research training so would typically be hired into another division - product development, say, likely at a lower salary. A PhD would find the work there to be pretty boring in most cases (startup companies excepted, I suppose), but it would feel "about right" for a BS holder.

Depending on the company there may be a ceiling or not. Most companies try to make it possible for promising employees to move up, so the chance is often there, but in order to do it you need to get the skills to do the required research. That may require additional education, not just "on the job learning". And a person who is trying to move up will always be competing with others (recent PhDs) who already have the skills that are needed at the moment. And you not only have to do the current job but learn how to do the next one.

None of this relates to your headline question, however. If you study six or so years for a doctorate, making essentially no money beyond bare essentials, it takes a while to make up for that financially even if you then start at a higher salary. And then there may be student debt, as well.

But people who get PhDs and similar are seldom driven primarily by money. Such people are more likely to be willing to sacrifice a bit so as to follow the lure of mathematics or science, or whatever. Ideas. But a lot of people, fiction writers, say, value other things more than money. If you can follow your dreams and get paid for it, that may be enough. It is why a lot of people want to be academics, actually.

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    Some PhDs in some fields and some countries are reasonably well paid. I certainly made enough money as a PhD student to pay off my (small) student debt and end up with enough savings to buy a home (if I wanted one). Academia varies more than you think. – gerrit Aug 26 '19 at 8:22
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    In any large company I have experience of that has a large research budget, in the short term you are "competing with others" but in the long term (say > 5 to10 years) you pretty much get to write your own job description, so long as you have a track record of making a lot of money for the company. But of course the majority of new recruits aren't "good enough" to do that, whatever their paper qualifications. – alephzero Aug 26 '19 at 10:31
  • Why do you say that research is theoretical rather than practical in most fields? I would say it's exactly the opposite. I can't think of any fields that aren't essentially mathematics (maths, CS, theoretical physics etc.) where the research would be theoretical. Most PhDs I can think of would be very practical (the various fields of biology, chemistry, experimental physics, pretty much all of STEM). Unless you consider something like historical research theoretical for some reason, all of the liberal arts PhDs would also be practical research. – terdon Aug 26 '19 at 12:56
  • @terdon, sorry, no. Philosophy can be pretty theoretical. Most doctorates don't concern themselves with applications of the field, but extending what is known: ie theory. – Buffy Aug 26 '19 at 13:00
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    @terdon A really good example from the 80s/90s in CS would be various formal specification systems like UML. The field was born out of a theoretical idea that formally proving correctness would give bug free code. The leaders in that field agree now that the translation from design to choose is relatively robust, and the biggest problem is actually correctness of the requirements. Essentially they all agree that a decade of theoretical work worldwide was mostly a waste of everyone's time. Industry almost completely ignored it. – Graham Aug 26 '19 at 22:29
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The answer is very straightfoward: A PhD is an apprenticeship towards becoming a researcher. It's not furthering a general education, but rather job training for a specific career path. This career path is not on the route towards becoming an industry worker, which focuses much more on using well-understood techniques to solve well-understood problems than it does on expanding the boundaries of human knowledge. (Both are very respectable careers to have, they're just different things.)

As a result, if you want to go into industry after having completed your PhD, you're asking a company to hire you after you've spent 4+ years of your life doing something else entirely. The person who spent those four years in industry is a safer bet, and also has 4 years of raises, promotions, and job experience under their belt for exactly the kind of work they're competing with you for.

If you know you want to go into industry for certain, get your bachelor's or maybe your master's and then land your first job. If you want to go into research, get your PhD. Don't get a PhD just for the prestige if it doesn't take you down the career path you want.

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    While I agree with the general idea of the answer it needs to be said that private research is also widely available, just think of Pharma, Lifescience, Cloud Startups, AI, Quantom Computing, Private Aerospace and so on. In addition jobs with highly specialized analytical skills like Big Data Scientists or financial mathematicians and statistics are also areas where PhD are hired. – eckes Aug 27 '19 at 11:31
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As a software engineer who has worked for Fortune 100 tech companies, I can assure you that the lack of an advanced degree is no impediment to securing lucrative employment. I say this as someone who not only lacked a Ph.D and MS, but even a BS degree! In fact, you may be shocked to learn how much interns with no discernible experience besides a few years of schooling can earn at a FAANG or similar. At no point in my career did a boss or anyone else suggest: "Your path to promotion is limited by your education/schooling/degrees." On the contrary, I regularly participated in the hiring process and found that candidates with advanced degrees were, on average, no better than those with a BS or simply a lot of practice.

If your goal is to obtain one of the few positions that actually requires a Ph.D, then I don't have much to say about that. But the software engineering sector in general prizes youth, not education. Software companies are eager to snatch up fresh-faced college grads because they will work long hours, learn new technologies quickly, let go of obsolete technologies equally quickly (or better, agitate for change), and absorb the company culture without so much bickering about work/life balance. As you can imagine, someone who spent 5 years in academia is not actually going to look so competitive or attractive, relatively speaking. I would go so far as to say that if you bother to get a Ph.D, then it would be "financially irresponsible" to pursue any positions that don't require such an advanced degree, because of the compromises and trade-offs entailed by that choice.

Of course, you can succeed in technology at any age, but age discrimination is real and not going away any time soon. Software engineers are increasingly becoming like new automobiles--your value declines dramatically the moment you step off campus.

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In the past, now or in future?!

With currently declining number of stock corporations, world population growth converging, machine learning algorithms replacing high-qualified academics in medical diagnostics, finance mathematics, law... you should also internalize into your decision making how future-proof your education based on a bachelor or master degree is. Having a relatively good and demanded but specialist degree now might turn out a professional dead end in 10-20 years with the exponential progress rate in technology.

A PhD diversifies your knowledge and job risk, qualifies you to teach yourself new things and to solve bigger problems autonomously as well as asking new important questions concerning research and industry applications. PhD students often look too much on the title itself which will give you often no salary bonus and lose out of eyes or don't know what they learn on the way to earning the title. During academia you can meet and work with very different people and make very different experiences in comparison to industry.

While doing a PhD later is still an option and many master graduates often choose a PhD sometimes because the job-market is overloaded with applicants in a economical regression, I wouldn't start a PhD in your 40s. Then I think your financial losses will be much bigger than doing it after bachelor/master or in your 30s. But working in industry a few years before doing a PhD is an option I would always consider if you are not sure to pursue an academica career.

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Part of answering the question accurately is defining what you think "Financially Irresponsible" means.

In the linked question, the user seems to define it as the maximum amount of profit they can make in their lifetime or at least in the time period of them finishing their PhD and finding their first job. By this definition, in fields where industry is mostly practical application of skills (think software developer, system administrator, etc), it would be financially irresponsible to get a PhD since you would be losing out on a higher salary, potential bonuses, and most importantly industry experience that could lead to promotions and higher salaries.

In some industries, getting higher education like a masters degree or PhD is necessary to find a high paying industry job. There are many very general degrees like biology, chemistry, physics, or mathematics that have very few positions for BS graduates but more, higher paying positions for those who furthered their education and got a more specialized degree (Biology BS -> Dermatologist, Mathematics BS -> Big Data Analyst, etc)

In terms of the points you brought up:

A. Regardless of whether or not you have an advanced degree, you will more likely than not end up in a relatively low level position if you have no industry experience. Even if you end up in a more advanced form of industry because of your degree, you will probably start out on the lowest rung of the ladder.

B. In industry, you are usually only capped by your skill and turnover of the higher ups in your company. The second point is irrelevant if you are finding a new job with the experience you have from previous ones.

If you are asking because you had plans to get a PhD and are now second guessing yourself, try to figure out the exact reasons why you would like a PhD, even before thinking about if you feel it is necessary for your field. If you are only in it for the extra money/higher level position, you may need to evaluate whether a PhD will actually be beneficial in your field.

If you asked just out of curiosity, hopefully these answers have helped you out.

To put it into context, I have a BS in CIS and a minor in System administration. The sysadmin classes were quite close to what I experienced when I worked as a sysadmin with the caveat that you cannot possibly touch on every technology, command, etc that you may need in an industry position with the amount of courses you would take for your degree. As a software developer, I use little to none of what I learned in my CS classes and in retrospect, I feel like universities are starting to treat the CS curriculum similarly to how they treat other hard sciences in the sense that you are learning primarily theoretical concepts and techniques and spending very little time on the application of such techniques.

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Unless you have people who depend on you as a source of income due to inability to support themselves financially and broken economic systems that don't address this, there is simply no such thing as "financial irresponsibility". It may be financially disadvantageous to you to get a PhD, but you're not wronging anyone else by doing it. You're well within your rights and reasonable, non-antisocial behavior to make use of academic opportunities because you think it will make your life better/happier/whatever or because you think doing so will bring benefit to others or to the sum of human knowledge.

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There is an implicit assumption in the question which (at least in the US, and with a CS degree path) is completely false. That is that you must follow a sequential path: BS -> MS -> PhD -> employment (whether in industry or academia). It's perfectly possible to do BS, lucrative employment while working on MS, more lucrative employment, work on PhD because all that lucrative employment (and a lack of extravagant habits) you don't really need any more money (or at least not much), and can pursue things that interest you.

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If money is your main concern then yes, you should not go for a PhD.

If you are more concerned with risking your the tasks in your working life to be 99% trivial under-stimulating boredom traps if you don't go for a PhD, then you should go for a PhD.

The thing is, you don't know how boring or understimulating you would find typical BSc or MSc tasks to be until you try working for a year or two.

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