Economist estimates payoff of elite colleges
By Ken Howard
Going to an academically elite college does not
necessarily boost your earnings potential, according to a
study by Alan Krueger, Thoman and Bendheim Professor in
Economics and Public Affairs.
In a working paper on "Estimating the Payoff to Attending
a More Selective College," Krueger found that a school's
selectivity, as measured by matriculants' average SAT
scores, does not correlate with students' later income, once
the abilities of the students upon entering college are
taken into account.
This finding challenges previous studies positively
linking earnings to a college's prestige. The researchers
did find that for a subset of students -- those from a
financially disadvantaged background -- an elite education
brings greater financial rewards.
College and Beyond database
The paper, coauthored with researcher Stacy Berg Dale of
the Andrew W. Mellon Foundation, was published by the
National Bureau of Economic Research. It examines data from
the College and Beyond database developed by the Mellon
Foundation, which tracks 14,239 adults who entered 30
colleges in 1976. Krueger and Dale correlated 1995 income of
those adults with the SAT scores of the colleges they
attended. They also examined data on 2,127 workers who
attended a broader set of colleges using the National
Longitudinal Study of the High School Class of 1972.
In both data sets, Krueger and Dale, like other
researchers, found that students who attend more selective
colleges tend to earn higher salaries later on than those
who attend less selective colleges. However, Krueger and
Dale looked not only at the schools those students attended
but also where they were accepted and rejected. They found
that where a student applies is a more powerful predictor of
future earnings success than which school he or she
attends.
Says Krueger, "It appears that student ambition, as
reflected in the quality of the school to which he or she
applies, is a better predictor of earning success than what
college they ultimately choose or which college chooses
them." The researchers refer to this phenomena as the
"Steven Spielberg Effect," citing the experience of the
filmmaker who was rejected by both USC and UCLA film schools
and ended up attending a less prestigious program but later
achieving tremendous success.
Krueger and Dale found a different pattern for students
from financially disadvantaged backgrounds, whose earning
power as a group was improved by going to a more
academically elite college. "These findings suggest that
colleges that provide more tuition assistance to children
from lower income families are pursuing the right path,
since we find that these are students who benefit the most
from attending highly selective schools," Krueger
observed.
The working paper is available online at http://papers.nber.org/papers/W7322.
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