What does a degree from an elite institution get you? Maybe not as much as you think, Jeff Guo argues in the Washington Post's "Wonkblog."
While graduates of elite colleges tend to earn more money over the course of their career, it is not clear if the trend is a case of cause and effect. Stacy Dale, an economist with the research firm Mathematica, and Alan Krueger, a Princeton University economist, have published several studies on the topic.
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Some of Dale and Krueger's findings are predictable: High school students with comparable academic records who attended more selective institutions ended up earning more after college graduation. But that frame of analysis doesn't account for other factors—like extracurricular activities and recommendations—that colleges use to select applicants, Guo explains.
Chicken and the egg
Seeking that additional nuance, Dale and Krueger identified students who were admitted into elite colleges and then compared those who matriculated against those students who decided not to attend. "[S]tudents didn't seem to suffer by attending less-selective schools," Guo writes. "Apparently, an acceptance letter from Stanford was as good as attending Stanford."
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Notably, these findings only applied to white students. Blacks and Hispanics from less educated families seemed to gain significant earnings increases from attending a selective school. But Guo hypothesizes that the difference couuld caused by the expanded social network that elite schools allow graduates to tap into.
Jonathan Wai, a psychologist at Duke University, examined the issue from a different angle, examining how well-represented graduates of elite institutions are in elite professions, like billionaires and senators. Not surprisingly, American elites were much more likely to have attended elite schools.
For instance, they made up about 41% of federal judges and 45% of billionaires. But Wai draws a paradoxical conclusion from the data. Top schools don't make people smart and successful—the students who got in were predisposed to success to begin with. "If you look at colleges with the highest SAT scores, those students are likely in the top 1% of cognitive ability," he observes.
Guo's ultimate takeaway: for the brightest students, "attending an 'elite' institution probably won't have much impact on [their] future earnings" (Guo, "Wonkblog," Washington Post, 11/27; Leonhardt, "Economix," New York Times, 2/21/2011).
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