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Posted at 10:16 AM ET, 02/21/2011

What's an elite education worth? (Part II)

By Ezra Klein

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. ...

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. In fact, it went away merely by including the colleges that students had applied to -- and not taking into account whether they were accepted. A student with a 1,400 SAT score who went to Penn State but applied to Penn earned as much, on average, as a student with a 1,400 who went to Penn.

That's David Leonhardt, though note the caveat:

A few major groups did not fit the pattern: black students, Latino students, low-income students and students whose parents did not graduate from college. “For them, attending a more selective school increased earnings significantly,” Mr. Krueger has written. Why? Perhaps they benefit from professional connections they would not otherwise have. Perhaps they acquire habits or skills that middle-class and affluent students have already acquired in high school or at home.

My previous post on this subject is here.

By Ezra Klein  | February 21, 2011; 10:16 AM ET
Categories:  Education  
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Next: How to read the president's budget


Off topic but what ever happened to the semi weekly NBER roundups?

Posted by: Swaskowi | February 21, 2011 11:31 AM | Report abuse

Everyone assumes s that "connections" are good for career advancement and career advancement only. But from the point of view of knowledge, which is collaborative, "connections" at an "elite" school should ideally mean the most informed people-- with the most expertise and imagination -- can interrelate and communicate with one another and advance knowledge more effectively. This seems to me an advantage that "elite" (i.e., high quality) education has for society at large, and not just the individual. The latter has limited social value, and indeed, promotes resentment , jealousy, and anti-intellectual attitudes (which we see in spades today) and it is disheartening that it is forefronted.

Posted by: harold3 | February 21, 2011 11:35 AM | Report abuse

Leonhardt's take is correct. There are benefits from surrounding one with an "elite" social group of peers. If one already belongs to such a group prior to college, the effect isn't very pronounced, but if one does not, the benefits can be large.

An interesting tangent to this is how the makeup of social groups change depending on the proportions of sub-groups. Large groups generally welcome a few new members as long as those new members aren't numerous enough to change the general characteristics of the large group. If the new group of "others" is too large, the two groups will remain separate and co-exist side by side with little interaction between the two. One can see this in everything from sports fans, racial self-segregation in diverse high schools, how people react to immigrants or new neighbors, how Royals react to the prospect of a "commoner" marrying in to even how the survivors of Lost react to members of "the Others." A few new members to the group is ok, but too many and they'll splinter into separate groups along certain characteristics. The interaction between such groups being limited at best to situations of outright hostility.

For Leonhardt's comments, this means that if the groups he speaks of become too large at an elite school, they will likely stick together (or not be accepted by the larger group) and not make the professional connections he mentions.

Posted by: Nylund154 | February 21, 2011 11:48 AM | Report abuse

Certainly money matters, but I would measure the success of the education in more important terms. If the reader's education was successful, those important terms are obvious to them.

Posted by: denim39 | February 21, 2011 12:03 PM | Report abuse

It does depend.

If you're going to masters, PhD, or professional school, having a bachelors from a top school helps a lot to get into a top grad school. And if you're going into academia, a PhD from a top grad school is an overwhelming factor in how high up is your first job, and all that initial advantage is hard to overcome for those that don't have it. The pedigree is huge, and being at a top school you have tremendously more resources, top people helping you and co-authoring with you who have the experience, knowledge, reputation, and connections to get you published, access to expensive exclusive data, money to do projects, etc. In academia, if you start high, you can't fall too far. If you start at Harvard, the pedigree and all the help and resources, even in pretty a worst case scenario, will allow you to end up with tenure at a solid state university. But if you start low, it's very hard to rise to the top levels, working largely on your own with no pedigree and little resources, at least in finance where I did my PhD work.

As an MBA student at a top school, Michigan, it was my understanding that it was extremely difficult to even get a foot in the door in some professions like investment banking without a prestige degree.

Posted by: RichardHSerlin | February 21, 2011 1:52 PM | Report abuse

Your Penn/Penn State example is not particularly helpful to your point. In many fields a Penn State degree is considerably more valuable. Penn State is an internationally known academic name brand. Penn is a very fine school, but more a regional than a national institution. Mr. Serlin's remarks strike me as showing that investment bankers are as poor at calculating the value of academic credentials as they were at real estate investments. In my own field (medicine) our great research institutions are staffed by bright young things from State U's, and foreign institutions, with only the occasional individual from the Ivy's.

Posted by: DrPath | February 21, 2011 8:43 PM | Report abuse

Purpose of education should be to enrich taste, perfect judgment & enable sacrifice-- desiderata beyond price [& major defenses against the Borg]...making money is tertiary.

Posted by: greenchoyss | February 22, 2011 7:56 AM | Report abuse

It is not the size of the dog in the fight; it is the size of the fight in the dog. Now that maybe too graphic and or too violent a comparison but it is an unavoidable FACT.

I do not care where you went to school or even if you went to school. If you are going to succeed for yourself or for your employer you are going to have to be a WORKER BEE not just an alumni.

Those willing to put in the ONGOING effort will ALWAYS succeed over those that sit on their laurels.

Posted by: DGJeep | February 22, 2011 5:47 PM | Report abuse

What qualities make a person successful in his/her career is the key question at hand. Take three common and lucrative professions, for example: medicine, law and business. Do the most successful entreprenuers, doctors and lawyers only have Ivy League educations? Of course not.

Social skills, business sense and true passion for your profession lead to greater success than book smarts. Top-notch colleges may give you access to an elite network, but that's not worth much unless you've got the skills to succeed against the rest. I hate to say this, but someone who got a 1500 on the SATs yet can't seem to carry on a conversation isn't going to get too far in a interview or sales pitch. As long as a person has a certain level of intelligence and the EQ to match, he/she can succeed in a multitude professions.

Posted by: oweiss | February 24, 2011 1:18 PM | Report abuse

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