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I don't think that concern necessarily reflects reality. I think by far, the largest cause for people dropping out/transfering is a loss of interest in science, and there's not too much that Caltech can reaslistically do about that except to prioritize interest/passion/etc. in science in admissions first and foremost
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There isn't much that Caltech can do
in the short-term . In the long term, Caltech could do what MIT did - which is broaden its offerings. Like I said before, MIT started life basically as a trade school dedicated to teaching basically only engineering and sciences. The MIT Sloan School wasn't started until the 1910's. Econ wasn't offered until around the 1930's or so, and the Econ department didn't start offering PhD's until around the 40's. Political science didn't become its own department until the 1960's (before, it was part of the Economics department). Now, it's the #10 ranked graduate poli-sci department in the country according to USNews, which I think is not bad for only being around for 40 years. The MIT Media Lab wasn't founded until the 1980's.
So in the long term, Caltech could choose to broaden its offerings the way that MIT has. In the short term, Caltech might choose to engage in partnerships with nearly schools, i.e. the Claremonts, just like how MIT has extensive cross-reg agreements with local schools like Harvard and Wellesley.
Now, don't get me wrong. I respect Caltech. I am simply saying that if Caltech wanted to eliminate the problem of students who want broader offerings, there are things that could be done for them. In fact, Caltech has already made moves to do this - i.e. offering options in English, Philosophy, and History. I don't think these options have been around for very long; I suspect they were offered precisely to satisfy those students who are looking for broader options.
Besides, I think other Caltech'ers, even Ben Golub, has stated that Caltech s not as harshly rigorous as it was in the old days. {To be fair, MIT isn't either}. That just shows that universities can and do change over time.