Revisiting the Value of Elite Colleges: Why that Pricey School May Not Payoff Like You Hoped

By DAVID LEONHARDT in the New York Times

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A decade ago, two economists — Stacy Dale and Alan Krueger — published a research paper arguing that elite colleges did not seem to give most graduates an earnings boost. As you might expect, the paper received a ton of attention. Ms. Dale and Mr. Krueger have just finished a new version of the study — with vastly more and better data, covering people into their 40s and 50s, as well as looking at a set of more recent college graduates — and the new version comes to the same conclusion. 

Given how counterintuitive that conclusion is and, that some other economists have been skeptical of it, I want to devote a post to the new paper.

The starting point is the obvious fact that graduates of elite colleges make more money than graduates of less elite colleges. This pattern holds even when you control for the SAT scores and grades of graduates. By themselves, these patterns seem to suggest that the college is a major reason for the earnings difference.

But Ms. Dale — an economist at Mathematica, a research firm — and Mr. Krueger — a Princeton economist and former contributor to this blog — added a new variable in their research. They also controlled for the colleges that students applied to and were accepted by.

Doing so allowed them to capture much more information about the students than SAT scores and grades do. Someone who applies to Duke, Williams or Yale may be signaling that he or she is more confident and ambitious than someone with similar scores and grades who does not apply. Someone who is accepted by a highly selective school may have other skills that their scores didn’t pick up, but that the admissions officers noticed.

Once the two economists added these new variables, the earnings difference disappeared… It’s still deeply surprising that choosing to go to, say, Xavier instead of Columbia may not affect your future earnings.

Alan Krueger’s last word:

“My advice to students: Don’t believe that the only school worth attending is one that would not admit you. That you go to college is more important than where you go. Find a school whose academic strengths match your interests and that devotes resources to instruction in those fields. Recognize that your own motivation, ambition and talents will determine your success more than the college name on your diploma.”

Read the entire article…