{"id":22625,"date":"2026-02-10T22:50:28","date_gmt":"2026-02-10T14:50:28","guid":{"rendered":"https:\/\/fass.nus.edu.sg\/ecs\/?page_id=22625"},"modified":"2026-02-10T22:50:28","modified_gmt":"2026-02-10T14:50:28","slug":"nusecon-digest-is-a-fourth-honours-year-worth-it-evidence-from-nus","status":"publish","type":"page","link":"https:\/\/fass.nus.edu.sg\/ecs\/nusecon-digest-is-a-fourth-honours-year-worth-it-evidence-from-nus\/","title":{"rendered":"NUSEcon Digest"},"content":{"rendered":"\n

\n\t\tNUSEconDigest (SCAPE) \n\t<\/h2>\n\t

Is a Fourth “Honours” Year Worth It? Evidence from NUS\u00a0 <\/strong><\/h3>\n

February 2026<\/strong><\/h2>\n

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Is a fourth year of university a wise investment, or just a way to delay adulthood? A study published in the\u00a0Journal of Public Economics<\/i>\u00a0(2023) examines this by looking at a unique “natural experiment” at the National University of Singapore (NUS).\u00a0<\/p>\n

Many university systems offer a three-year bachelor’s degree with an optional fourth “honours” year, but there is surprisingly little causal evidence on what that extra year\u00a0yields\u00a0in the\u00a0labour\u00a0market. In\u00a0“The returns to an additional year of education for college graduates,”\u00a0Jie Gong and Jessica Pan study this policy-relevant margin using\u00a0data from\u00a0the National University of Singapore (NUS), where students in several faculties can graduate after three years with a regular bachelor’s degree or complete a fourth, more advanced\u00a0honours\u00a0year.\u00a0<\/p>\n

The paper exploits a sharp institutional rule: in selected faculties, eligibility to\u00a0enrol\u00a0in the fourth (honours) year is governed by a third-year\u00a0Cumulative Average Point (CAP)\u00a0threshold. Students just above the cutoff are much more likely to complete the\u00a0honours\u00a0year than students who narrowly miss it, yet they are otherwise comparable in academic performance and background characteristics. This\u00a0creates\u00a0a fuzzy regression discontinuity design.\u00a0\u00a0<\/p>\n

Using NUS administrative student records\u00a0linked\u00a0to\u00a0Graduate Employment Survey (about six months after graduation),\u00a0and for some cohorts,\u00a0to\u00a0tax records, the authors estimate the earnings payoff to the\u00a0additional\u00a0year of advanced undergraduate study.\u00a0The main result is economically meaningful: completing the fourth year raises monthly earnings by about 12% around six months after graduation. These gains do not appear to be short-lived;\u00a0administrative tax data show that the earnings premium persists for at least four years after graduation.\u00a0<\/p>\n

What drives the return\u00a0–\u00a0human capital or\u00a0signalling? While disentangling these channels is difficult, the paper offers suggestive evidence against a “pure\u00a0signalling” story. First, if\u00a0honours\u00a0status were merely a signal that fades as employers learn, returns should decline with experience. However,\u00a0the\u00a0\u00a0<\/p>\n

Using NUS grade cutoffs, an extra\u00a0honours\u00a0year raises graduates’ earnings about 12%, with gains persisting for several years.<\/i><\/b>\u00a0<\/p>\n

estimated returns\u00a0remain\u00a0substantial\u00a0over the early career window\u00a0observed\u00a0in tax data. Second, when NUS later lowered the eligibility threshold to encourage more students to\u00a0enrol\u00a0in the\u00a0honours\u00a0year, the estimated return remained sizable rather than being “diluted,”\u00a0which is hard to square with a model where the payoff is primarily the scarcity value of an\u00a0honours\u00a0label.\u00a0<\/p>\n