NewEngSocSciMan

"Recent research also suggests that lower-income students benefit more from an elite education than other students do. Two economists, Alan B. Krueger and Stacy Berg Dale, studied the earnings of college graduates and found that for most, the selectivity of their alma maters had little effect on their incomes once other factors, like SAT scores, were taken into account. To use a hypothetical example, a graduate of North Carolina State who scored a 1200 on the SAT makes as much, on average, as a Duke graduate with a 1200. But there was an exception: poor students. Even controlling for test scores, they made more money if they went to elite colleges. They evidently gained something like closer contact with professors, exposure to new kinds of jobs or connections that they couldn’t get elsewhere." –"The (Yes) Low Cost of Higher Ed," The New York Times (http://www.nytimes.com/2008/04/20/ed...tml?ref=edlife)
Read it, and be enlightened. The study itself is cited all over, such as in an Atlantic Monthly article from 2004 on the Brookings Institution website (http://www.brookings.edu/articles/20...terbrook.aspx). The study itself, however, is a tad harder to get. Since the paper is from the National Bureau of Economic Research, you've gotta pay. However, the abstract is below (cited from the NBER website):

"There are many estimates of the effect of college quality on students' subsequent earnings. One difficulty interpreting past estimates, however, is that elite colleges admit students, in part, based on characteristics that are related to their earnings capacity. Since some of these characteristics are unobserved by researchers who later estimate wage equations, it is difficult to parse out the effect of attending a selective college from the students' pre-college characteristics. This paper uses information on the set of colleges at which students were accepted and rejected to remove the effect of unobserved characteristics that influence college admission. Specifically, we match students in the newly colleted [sic.] College and Beyond (C&B) Data Set who were admitted to and rejected from a similar set of institutions, and estimate fixed effects models. As another approach to adjust for selection bias, we control for the average SAT score of the schools to which students applied using both the C&B and National Longitudinal Survey of the High School Class of 1972. We find that students who attended more selective colleges do not earn more than other students who were accepted and rejected by comparable schools but attended less selective colleges. However, the average tuition charged by the school is significantly related to the students' subsequent earnings. Indeed, we find a substantial internal rate of return from attending a more costly college. Lastly, the payoff to attending an elite college appears to be greater for students from more disadvantaged family backgrounds."

Well, hey, there, folks. Using longitudinal data from the class of 1972, they find no significant difference than students accepted or rejected by more selective colleges and students who attend the more selective colleges when SAT scores (I know, they're controversial, but they served as a fair metric in this case, socioeconomic and ethnic biases notwithstanding) are controlled for.

Hooray! Even if we don't get in to the tippy-top, intellectual prowess and effort alone can bring us where we want to be...and that's empirical.

aisgzdavinci

^ you forgot connections, which really helps you land a good job you know.

tokenadult

Old research mentioned in the recent article, and wrong summary of the conclusion in the thread title. What is most important about the study is in the part of the article you quoted, but not hinted at by the thread title:

It's a VERY good idea for students from low-income families to go to the most elite colleges that will admit them.

Other scholars have noted that Krueger and Dale aggregated their data in a way that reduced the apparent effect of attending an elite college, so their finding may really understate the benefits for ALL applicants of going to the best college that will admit you.

hampster

students at elite schools are more or less interested in pursuing high income careers?

gadad

Your title addresses "outcomes" but the article is solely about future earnings. I'd suggest that future earning potential is only one outcome of a higher education, and probably not at the top of the list of outcomes in terms of importance.

galoisien

Because obviously no one on CC is low-income and therefore it is safe to discard that other result.

*rolleyes*

Begoner

No, it's not safe to "discard that other result," but it is safe to state that the difference between the quality of instruction at more and less selective universities does not translate into greater earning potential.

tokenadult

Even the Krueger and Dale study doesn't say that, and a lot of scholars think they got their data analysis wrong. For low-income students, for sure, and perhaps for ALL students, the "flight to quality" in college choice makes economic sense (and it may make sense on other grounds too).

gadad

Barack Obama could have chosen to become independently wealthy as an attorney, but he chose to pursue political involvement instead. I have no doubt that he could have become wealthy had he stayed home and attended the U. of Illinois at Chicago. Could he have become a Presidential nominee? It's hard to say. I would argue that unless you're struggling to meet the bare necessities of life, having choices and opportunities is far better than having a high income. Few people are as miserable as those who earn a substantial income doing something that they hate, and feel trapped by the reality that they cannot change their life without forfeiting their earning potential.

sakky

Well, actually, the final version has been published in the Quarterly Journal of Economics (QJE). Not that that's any easier to get online, however, those who are college students can probably get it through their campus library through JStor or EBSCOHOST.


And right there is a major limitation of Dale & Krueger. Their main control variable is SAT scores. But honestly, can anybody name a single top school that admits people solely on SAT scores only? I think we can all agree that many of the top schools like Harvard could easily fill their entire class with perfect SAT scorers if they wanted to, yet the fact is, plenty of people with perfect scores don't get in, and others with lower scores do get in.

And this, I agree with others here, is probably the biggest limitation of Dale & Krueger: that incomes are the outcome variable. As others here have said, money become less important once you have a livable amount. Let's face it. Once you've secured a middle class or upper-middle-class lifestyle, then earning another $10k or $20k or even $100k a year doesn't really matter. After all, you're still going to be living basically the same lifestyle. Sure, you might live in a better house and drive a better car, but you're still basically going to live the same lifestyle. Hence, at that point, it's more important for you to find a career that you truly enjoy as opposed to one that will earn you every single penny you can get.

In fact, I would argue that there may actually be an inverse relationship between top colleges and income simply because many of the students at top colleges come from very rich families and hence don't care about money. Hence, for example, they can spend their lives doing (low-paying) nonprofit work. Similarly, many of the graduates from top colleges end up working in academia as professors, who are relatively low-paid, but who not only have the intellectual free to study what they want, but can also get tenure (which means that they can never be fired). Think about that: regular people may have to earn excess money as a buffer to tide them over in case they get laid off. Tenured professors don't need that because they can never be laid off.

The corollary to that is that if you don't have money (i.e. if you're poor), then a few more thousand dollars can really matter a lot. Hence, I'm not surprised to find that Dale & Krueger indicates that the elite colleges are highly useful if you're poor.

The upshot is that the real value of any given school is in whether it helps you to do what you want to do in life, regardless of whether it makes a lot of money or not.

NewEngSocSciMan

Perhaps the income issue is true, but, now, correct me if I'm wrong, but for all those except the poor, Dale and Krueger state that income difference is minimal between colleges of similar levels.

Income, yes, isn't the only measure of success, but there's few other objective ways to measure it. Educational attainment after college? Maybe. Grad/professional placement or acceptance rates? Maybe. But income is pretty well understood.

sakky

Actually, I disagree. Income is not well understood, because it is inherently a choice variable and is therefore endogenous. To a great extent, people have some choice over whether they want to have a high-paying career or not.

One better way to measure 'success' is to still use income, but to control it for various job tracks. For example, compare only those people who entered certain professions against each other. For example, one can compare a guy who went to Stanford and became an engineer vs. a guy who went to a no-name school and become an engineer. Another way would be to survey college seniors to see what sorts of jobs they actually wanted to get vs. what jobs they actually ended up getting.

Granted, all of these techniques have limitations too. But less so than D&K. That doesn't make D&K bad (for all studies have limitations), it just means that you can't read more into the study than what it actually says.

cellardweller

it is amazing how many people, even journalists from reputable newspapers, misquote the Dale, Krueger study to reach conclusions actually opposite from those in the study.

What Dale & Krueger found was actually quite the opposite. One of the main conclusions of the study is:

A key finding was that SAT score alone was not a good proxy for selectivity. As soon as they used a more comprehensive measure such as Barron's, significant differences emerged.

This is not a surprising finding. The most selective colleges use more than just SAT scores for admission.

The 23% difference in income is just between Tier 1 and Tier 2 colleges in the Barron's rankings. Differences were even greater when comparing to lower tier colleges. Even after adjusting for the self-revelation effect, the difference was still 13% for men and 18% for women, hardly insignificant. A finer segmentation using the USNWR ranking would find a significantly greater difference between the very elite colleges and the lower Tier schools. The one such school included in the D&K study (it appears to be Yale) was off the charts.

An interesting but not widely publicized finding of the study was that the more the student payed in tution the more they earned.

The authors speculated that the higher the tuition the higher the investment in education by the school.

Caroline Hoxby, an economist at Harvard specializing in the economics of education, has done research that confirms many of the Krueger-Dale findings. Using 1997-98 tuition figures, Hoxby concluded that a student who gave up a full scholarship at a Rank Three private college (average SATs: 90th percentile in verbal, 86th in math) to pay full price at a Rank One selective college (average SATs: 96th percentile in verbal, 93rd in math) earned back the difference in cost 3.4 times over his lifetime. Those who moved from paying average tuition at a Rank Three public college to paying average tuition at a Rank One private school earned back the difference in cost more than 30 times over.


So, the main conclusion from the D & K study is that which college you attend does matter and the more selective the college the greater the difference in future income. This contradicts the widespread belief that an investment in attending an expensive private colleges does not pay. Furthermore, the more you pay the more you earn.

A copy of the report can be found here:http://www.irs.princeton.edu/pubs/pdfs/409.pdf