In statistics, there is a common warning that correlation does not imply causation. We can try to identify causes for certain trends and results, but we need to consider all factors holistically and objectively. This concept is particularly important when discussing college admissions, especially ranking and selectivity. There have been many ongoing debates about the value and necessity of degrees from elite colleges. Does the school matter? Can students learn to learn, essentially? Likewise, if the student is motivated and talented enough, not to mention presented with worthwhile opportunities (see Jobs, Gates, Zuckerberg, Dell, and the list goes on), does school really matter? What’s more important – the school or the student?
In 1999, Stacy Dale and Alan Krueger, both with ties to Princeton University, authored “Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables.” Their findings led to the conclusion 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.” In other words, which university students chose to attend did not necessarily impact their future earnings, suggesting that the factor(s) that did impact future earnings were individual-bound.
Three years later, there was a 2002 follow-up, and more recently, another one in 2011: “Estimating the Return to College Selectivity over the Career Using Administrative Earnings Data.” To determine the financial benefits of attending an elite college, Dale and Krueger utilized data from the following schools:
Barnard College, Bryn Mawr College, Columbia University, Duke University, Emory University, Georgetown University, Kenyon College, Miami University of Ohio, Morehouse College, Northwestern University, Oberlin College, Penn State University, Princeton University, Smith College, Stanford University, Swarthmore College, Tufts University, Tulane University, University of Michigan, University of Pennsylvania, Vanderbilt University, Washington University, Wellesley College, Wesleyan University, Williams College, Xavier University, and Yale University.
Dale and Krueger also used earnings that were reported to IRS and SSA:
“The Social Security Administration linked College and Beyond data to SSA’s Detailed Earnings Records for the period of 1981 through 2007. The earnings measure for this analysis included the total earnings an individual reported to the Internal Revenue Service, including earnings from self-employment and earnings that were deferred to retirement plans.”
This time, their findings led to this conclusion:
“Consistent with the past literature, we find a positive and significant effect of the return to college selectivity during a student’s prime working years in regression models that do not adjust for unobserved student quality for cohorts that entered college in 1976 and 1989 using administrative earnings data from the SSA’s Detailed Earnings Records. Based on these same regression specifications, we also find that the return to selectivity increases over the course of a student’s career. However, after we adjust for unobserved student characteristics, the return to college selectivity falls dramatically.”
That is, after adjusting for “unobserved student characteristics,” such as motivation and networking, the college a student attends does not affect future earnings. There are a few hypotheses presented by the authors:
“Our analysis indicates that students who were more likely to attend the most selective school to which they were admitted had observable characteristics that are associated with higher earnings potential.
It is also possible that the benefit in terms of future earnings from attending a selective college varies across students, and that students sort into college based on their perceived benefit. For example, students who expect a lucrative career because they intend to earn an M.B.A. after college may sort into less selective undergraduate colleges.”
If we observe only the college years, we don’t have the entire picture. Some students may have financially rewarding plans already in place, so they don’t worry about the selectivity of their school.
“Long (2008) re-estimated the models used by Dale and Krueger (2002) and Black and Smith (2004) … [and] found that a variety of college characteristics have positive effects on educational attainment, even within specifications that adjust for selection bias; however, there is no consistent evidence for a positive relationship between college characteristics and earnings across the selection adjusted models.”
Recently, we’ve seen more college applications across the board, and because of the increase in the number of college graduates, it’s possible that students are choosing elite colleges to stand out:
“Because the percentage of students enrolling in college has increased over time, one might expect that it would be more important for students who entered college recently to distinguish themselves by attending more selective colleges.”
Overall, Dale and Krueger conclude that there is a “positive return to attending a more selective school for black and Hispanic students” and that “students from disadvantaged family backgrounds (in terms of educational attainment) experience a higher return to attending a selective college.” They also remind us that “about 35 percent of the students in each cohort in [their] sample did not attend the most selective school to which they were admitted.”
Still, the main takeaway is that “while most students who apply to selective colleges may be able to rely on their families and friends to provide job-networking opportunities, networking opportunities that become available from attending a selective college may be particularly valuable for black and Hispanic students, and for students from less-educated families.”
In short, what’s more important – the school or the student? The student matters much more than the school in most cases. Attending an elite college has its benefits, just not for everyone. The original 2011 article can be found here: https://www.nber.org/papers/w17159