NCPA - National Center for Policy Analysis

Do Graduates of Elite Universities Earn More?

February 23, 2011

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.  Ms. Dale and Mr. Krueger have just finished a new version of the study and the new version comes to the same conclusion, says the New York Times.

  • The starting point is the obvious fact that graduates of elite colleges make more money than graduates of less elite colleges.
  • This pattern holds even when you control for the SAT scores and grades of graduates.
  • By themselves, these patterns seem to suggest that the college is a major reason for the earnings difference.

But Ms. Dale and Mr. Krueger 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.  For example, 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. 

  • 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 University but applied to Ivy League University of Pennsylvania earned as much, on average, as a student with a 1,400 who went to the University of Pennsylvania.

It's important to note, though, that 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," say Mr. Krueger.  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, says the Times.

Source: David Leonhardt, "Revisiting the Value of Elite Colleges," New York Times, February 21, 2011.

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