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The Economist College Value Analysis

JHSJHS Registered User Posts: 17,073 Senior Member

I haven't seen this discussed here yet, and it deserves discussion. A week ago, The Economist published a huge analysis it did of the effect on early-career earnings of specific colleges, which of course included a ranking based on how each college performed vs. demographic expectations for its students. The analysis certainly doesn't resolve the question whether that's a good way to judge colleges -- something The Economist acknowledges -- or whether the particular data it used was powerful enough to make college-to-college differences meaningful. But it's the most sophisticated, thoughtful analysis of comparative earnings data I've seen, and the results are both interesting and surprising.

What The Economist team did was to take all of the data in the federal database and to develop a model of expected income based on factors other than which college people attended -- demographic factors like family income at the time of first enrollment, race, sex, and other factors like college major, region, and subsequent education. Then it identified an expected median income level for each college based on the characteristics of its financial aid-applying students. Then it looked at how each college's actual alumni did compared to the model's predicted level. The brilliance of this is that is compares engineers in the southeast to engineers in the southeast and English majors in the midwest to other English majors in the midwest. It doesn't simply tell you what you already knew.

What it tells you is that there are significant differences in college performance. The top of the list includes Harvard and MIT but also Babson, Villanova, and Cal State Bakersfield. And Yale -- with demographic expectations a littel higher than Harvard's -- is near the bottom of the list. Harvard graduates earn more than Villanova graduates, but the two beat the averages by about the same amount (as does tiny Otis College of Art and Design, whose grads seem to be beating expectations by an astonishing 40%). And how can it not be interesting that Harvard's 28-year-old former aid applicants out-earn Yale's 28-year-old former aid applicants by almost a third? I find that stunning, and almost inexplicable, given how fundamentally similar they are.

Replies to: The Economist College Value Analysis

  • IxnayBobIxnayBob Registered User Posts: 4,162 Senior Member
    I don't find the H/Y difference stunning. I know that my sample size is small, but the finding is tiredly consistent with what I would have predicted based on DS's classmates who chose to attend Y over H, and v.v.

    Fwiw, DS will probably make a good bit of money, but he'd rather design autonomous cars than be involved in a startup related to autonomous cars. Both kinds of people are needed, but they're different.
  • JHSJHS Registered User Posts: 17,073 Senior Member
    Yup, well I obviously don't read the College Admissions or College Search & Selection forums much. Or the Villanova forum.
  • ucbalumnusucbalumnus Registered User Posts: 63,552 Senior Member
    JHS wrote:
    And how can it not be interesting that Harvard's 28-year-old former aid applicants out-earn Yale's 28-year-old former aid applicants by almost a third? I find that stunning, and almost inexplicable, given how fundamentally similar they are.

    Presumably, there are some characteristics of the school or students that were not measured and put into the expectations. E.g. does one school have a higher tendency than the other of fast tracking students into Wall Street and consulting versus lower paid post-graduation destinations?

    Also, the sample size may be small at those particular schools, since it is based on the students with federal financial aid (a small percentage at both Harvard and Yale).
  • JHSJHS Registered User Posts: 17,073 Senior Member
    All good points, but -- (a) I think that, if it's not too small, the group of federal financial assistance applicants is an important one, especially if you are talking about a 30% difference. That's the kind of gap that never gets made up. (b) Of course it looks like there are some characteristics of the school or students that were not loaded into the expectations. That's what the analysis is trying to get at: How is College A and its students different from College B and its students?
  • PurpleTitanPurpleTitan Registered User Posts: 9,999 Senior Member
    Yep, this ranking can tell you if kids at school A will make more than the kids at school B who have the same characteristics (but possibly not the same motivations). It can not tell you if the same kid would make more money coming out of school A vs. school B. Anecdotally, it seems that W&L practically selects for kids who want to make money while both Georgetown and Harvard seems to attract those who do even compared to peers.

    Also, how do they account for unis having different disciplines? For instance, Northwestern has schools/departments in music, education, journalism, communications, and theatre. Most of those majors will not enter high-renumeration fields. Georgetown has none of those. How would you compare the 2 schools?

  • panpacificpanpacific Registered User Posts: 1,300 Senior Member
    According to Washington Monthly's ranking of colleges, Harvard and Yale do differ in the "Peace Corps" and "ROTC" categories.

    Peace Corps: Harvard 177
    Yale 57

    ROTC: Harvard 214
    Yale 134
    What are the implications of this difference on the earnings of graduates from both colleges?
  • PeriwinklePeriwinkle Registered User Posts: 3,501 Senior Member
    Hedge funders and tech entrepreneurs tend to make more money in their late 20s than foreign service officers, teachers, post-docs and military officers? On average, in the aggregate, etc. As the Economist is comparing the pay of a subset of students from both institutions, there's no way of knowing how the particular professions were distributed among the two subsets.

    It might be different if The Economist were to compare H&Y grads by undergraduate major. But they didn't.
  • ZinheadZinhead Registered User Posts: 2,610 Senior Member
    According to the article, The Economist used the following independent variables.

    Average SAT scores
    Sex ratio
    Race breakdown
    College size
    Public or private
    Mix of subjects students chose to study
    Affiliation with the Catholic Church or a Protestant Christian denomination
    Wealth of its state
    Prevailing wages in its city
    Ranked undergraduate business school
    Percentage of its students who receive federal Pell grants
    Liberal-arts college
    Political leftism and “reefer madness” indexes

    They do not publish the regression formula, but I would love to see what the positive and negative contributions are for each variable, particularly the leftism and reefer madness indexes.

  • Gator88NEGator88NE Registered User Posts: 5,431 Senior Member
    I'm not sure I buy into their methodology. Any rankings that has Caltech at the bottom (ranked 1,260, in the bottom 1% percentile) isn't of much value.
  • boudersbouders Registered User Posts: 1,865 Senior Member
    A large percentage of Caltech grads go into academia which doesn't pay well. I think their methodology is good.
  • JHSJHS Registered User Posts: 17,073 Senior Member
    They don't claim their analysis and methodology is the be-all and end-all of college quality. In fact, they caution that it isn't. But they say, with justification, that it's worth knowing the results of this analysis.

    As for Harvard vs. Yale, the larger number of engineers at Harvard shouldn't have any effect, because that would be factored into the expected earnings numbers. (As the article says, that's a fundamental flaw with most simple forms of this analysis: Engineers and pharmacists make more out of the box than almost any other field, so most analyses effectively wind up measuring the proportion of engineering and pharmacy grads a college has.) As it happens, notwithstanding that difference Yale actually has higher expected earnings than Harvard, although not by much.

    I note, by the way, that my class of 2009 kid has worked nowhere but in government and nonprofit enterprises, and out-earns by some margin the median for her class at Harvard, not to mention her own college which is down around the Yale level. Her college roommate, who is a PhD student in English Literature and Gender Studies, however, does not. And the roommate would be in these numbers, while my kid isn't.
  • PurpleTitanPurpleTitan Registered User Posts: 9,999 Senior Member
    edited November 2015
    Actually, the Economist states flat out that they're trying to determine which colleges give the best value and why.

    However, they miss the key component of motivations, without which, this study is no better and may be worse than something like the Payscale ranking.
    For instance, schools that send a disproportionate percentage of grads in to academia instead of finance/consulting/law (like Caltech or Swarthmore) are penalized. So is a school like Yale that sends a disproportionate number in to public service/non-profits.

    What good is a ranking that does that?
  • PurpleTitanPurpleTitan Registered User Posts: 9,999 Senior Member
    Also, they state that they take geography in to account, yet 17 of their top 20 are on the East or West coast, so in practice, just how well are they taking geography in to account?
This discussion has been closed.