Should you go to an Ivy League School?

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Mark Palko at the excellent blog Observational Epidemiology has a post arguing that the appeal of Ivy League degrees is primarily peer effects and selection. It’s popular these days to sneer at the Ivys. For instance, this WSJ article argues that State schools have an edge in business recruitment.

Still, it’s worth looking at the data. I’ll follow Robin Hanson’s idea that the best place to find an estimate of “X” is to find a paper that looks for “Y”, but controls for X.

There was a study that got a lot of press recently looking at the impact of kindergarden teachers on future economic outcomes. The focus was on how different classroom treatments left long-run impacts, but the slides of the paper also had this interesting result (not found in the actual paper itself):

Clearly, going to a top-ranked school seems to deliver far higher earnings at age 28 than poorer ranked schools. In fact, the relationship is highly non-linear. Contrary to what you may have heard (“All top-ranked schools are the same”); it in fact looks like the difference between top-ranked Harvard and 9th ranked Dartmouth is on the order of ~$4,000 a year (perhaps $100,000-$200,000 over the course of a lifetime?). That difference grows to something like $18,000 over 25th ranked UCLA, per year. However, when one gets down to the 75th ranked school; school rank doesn’t much matter anymore. You’re pulling in ~$43k regardless. In fact, these are likely under-estimates of the value of going to a top school. Many elite graduates are still in graduate studies by age 28, and earnings tend to increase as people hit prime working years.

The pure monetary benefits of going to a top-ranked school (including peer and selection effects) are very substantial; and these benefits rise proportionately with the rank of the school. The marginal benefit of getting into the next highest ranked school is actually higher the higher the rank of your current school. In other words, Yale grads should really really want to go to Harvard. A very rough calculation suggests that everyone who turns down a top-ranked school for a safety to avoid student loans is making a big mistake (though, this is the same type of rough calculation people make when they conclude that there is a high College premium in general).

(Also check out the earnings of those from schools ranked 75 and lower. High school graduates can make perhaps ~$30k a year. So those guys just gave up ~$120k in earnings, plus paying College tuition, for the privilege of making ~$44k by age 28. How big is that College premium again?)

Of course, the large effects of going to a top-ranked school could be coming purely from those peer and selection effects. Another paper, by Krueger and Dale, tackles these issues. They have data on people accepted to both selective and non-selective schools. By tracing the incomes of people who were accepted at both Harvard and Mass U, but choose Harvard against those were accepted at both but choose Mass U; they are able to better parcel out what going to Harvard has on your earnings, as opposed to just being the type of person who can get into Harvard.

If you check out their working paper (these results do not appear in subsequent versions of the paper and media reports), they find that the “Selectivity” of the College you finally go to as judged by Barrons matters a great deal in explaining the variance of future income, though the average SAT of the school does not.

One simple interpretation is that peer and selection effects don’t matter as much as you think. Just being the type of person who can get to Harvard isn’t enough; you need to actually go to Harvard to get the bonus. And having lots of high-SAT score friends at College doesn’t seem to help (though, interestingly, the Kindergarden study above did find evidence of peer effects. Your kindergarden pals matter but your College roommate doesn’t for your future earnings?).

Rather — it’s selectivity that delivers the extra premium, consistent with the findings above. Something about actually going to an Ivy League school — the connections, the signal — imparts the sizable bonus. Potentially, they could even be learning more, but I think we all know that’s not true.

I don’t want to push on this too much. Obviously, the type of person accepted to both Harvard and Mass U, but goes to Harvard, is going to be different from the person who chose Mass U in the same situation. And SAT scores don’t constitute the full universe of peer effects. Arguably, going to a highly selective school where everyone was able to pass through a very tough selection process produces a peer effect stronger than simply going to a school of lazy smart people.

But certainly I think this research points to strong and durable rents being earned by graduates of elite Universities. I think that makes Admissions processes that focus so strongly on legacy identity so pernicious. If Dan Ariely is really concerned about inequality, perhaps he should complain more about his University’s (Harvard) Admissions processes. There is perhaps no force There are few forces in the country so strongly promotive of inter-generational wealth accumulation as College Admissions practices, particularly at the top end of the wealth distribution, yet they remain very under-discussed whenever these topics come up.


  1. 1) i predict this post will get MANY COMMENTS. extrapolating from the current rate you may be the record holder for comments-per-post for a contributor to this weblog. i think to top this you need to talk about how we need to reimpose jew quotas at elite universities to foster diversity.

    2) re: inequality, this discussion only matters for the very top quality students. i don’t think admission decisions are a big effect on society as a whole, 80% of american undergraduate students go to public universities, and of the remaining 20% most do not go to private universities with signalling name recognition such as harvard or stanford. i once knew a wesleyan grad who joked that it was nice to meet someone on the west coast who wasn’t curious as to how he graduated from a women’s college (wellesley). and that’s not even addressing the huge network of conservative protestant schools which are private, but only marginally above “bible college” status.

    3) this issue was mooted in the early years of this weblog, fwiw. 2002-2003. ancient history now.

  2. I have to admit, my definition of peer effects was very broad and probably included some things that would make real social scientists shake their heads, including networking. Basically, I included any effect you would consistently see if you were able to duplicate this group of students in other institutions.

    I’ll try to fill in the details on OE, but in general terms, I’m suggesting that simply by gathering these students together and letting them interact socially, you will have a tremendous amount of talent and the network required to capitalize on it.

    It would be interesting to perform a variation of the Milgram experiment (done at Harvard, by the way) and measure the degrees of separation between recent grads and CEO/venture capitalists/publishers/producers/etc. I’m betting you would see a substantial difference between Mass U and Harvard.

    In other words, Harvard may turn out to be worth the money, not because of the classes but because of the room mates.

  3. Mean wage data for top ranked schools is likely skewed by the number of people who go into banking and/or corporate law, where salaries are much higher, especially for 28 year olds. Ezra Klein had some good discussion on this:

    Median wages might be interesting to look at. I think you might get something closer to linear. Either that or top school medians would get dragged down by the number of grads who go into academia, non-profit careers etc. while big state schools would be bolstered by the number of grads who go into business? At this point I’m in speculation territory.

  4. Razib,

    On 2, I admit to some hyperbole. I was primarily thinking of the top end of the wealth distribution, where I do think it is important, and I’ve edited to reflect that.


    That’s fair, though I would personally classify that as building social capital and connections, as opposed to being directly cognitively influenced. I agree that’s important, and probably accounts for some of these results.

    But I would be interested how that decomposes into direct social networking (ie, my roomate) versus being able to access a broader social network. I’m not sure how one does this, but I think it’s important when thinking about what the Ivy premium means. Is it all about going to Harvard and being roomates with a superstar, or is going to Harvard and getting a better reception in an interview with a Harvard grad enough?

    This also impacts how to think about legacies. Do they contribute superstar externalities; or do they just suck up the Ivy Premium instead of someone else? Regardless, I think it certainly impacts family wealth accumulation.

  5. A couple things:

    -The types of people who care about incremental school rank differences (or whose first garment was a Harvard onesie) might be the same as those who make career decisions based on potential salary rather than other considerations. Selection is still part of what’s going on here.

    - Your independent variable is the ranking system of a newspaper written for 5th graders. Is income directly or indirectly part of their…ahem…algorithm?

    -A $4K a year mean difference is hard to judge without knowing the standard deviation.What does an average tell you when you have mix of students going into law, medicine, finance along side kids getting PhDs or going into NGO work? For example, how does Dartmouth’s humanities PhD:hedge fund douche ratio (HP/HFD) compare to Harvard’s?

    - Relatedly, who really really really wants anything arbitrarily for an extra $4K a year? I could be living in a mansion in Omaha for what I paid for a condo in Cambridge. Should I really really really want to be in Omaha?

    - Are people meaningfully inhabiting different quality of life or living standard spheres across the spectrum of the top 50-100 schools? Is salary (above a certain point) a good measure of quality of life?

    - The whole point is crass; as far as I can tell the interesting discussion is whether the Ivies provide a better education than other quality schools.

  6. Amen – tell it brother: “There are few forces in the country so strongly promotive of inter-generational wealth accumulation as College Admissions practices, particularly at the top end of the wealth distribution, yet they remain very under-discussed whenever these topics come up.”

  7. - The whole point is crass; as far as I can tell the interesting discussion is whether the Ivies provide a better education than other quality schools.

    the aim of many smart people is not to become smarter but seem smarter, alas. it’s cheaper in time and effort.

  8. “High school graduates can make perhaps ~$30k a year.”

    Electricians, X-ray technicians, and many other skilled trades people make an average of $50,000 with either no college or an A.A. degree. There are huge numbers of kids with crappy BA’s in bullshit majors who have no skills at all and would be more employable and of more productive use to society if they’d spent those four years learning a trade.

  9. I would highly doubt if networking has any measurable impact on the career performance of Ivy grads. The chance of making any real connections at the college level that would have a real impact on your career is very small. The biggest advantage of the Ivies is just recruiting. Many of the highest-paying employers (Wall Street and the best consulting firms) recruit primarily or exclusively at the Ivies and a few other elite colleges, and a large fraction of the Ivy class works there. If you don’t go to an elite college, you would have to be a superstar to even get an interview at those employers.

  10. Thanks. This is a very interesting topic with very little data available, so thanks for spotting this.

    Do any of the on-going longitudinal studies such as NLSY-79 or NLSY-97 break out colleges?

    By the way, Tennessee is one of the lowest cost of living states in the country, so most people who move out of state will wind up making more money but they won’t necessarily have a higher standard of living. Cost of living differences between places haven’t traditionally been accounted for in studies (although cost of living differences over time have always been adjusted for over the last 30 or 40 years), but the cost of land is becoming a big enough component in the cost of living that social scientists will need to start thinking about it.

  11. The impact of college on career networking should be studied quantitatively as well, as should the impact of college choice on marriage. Everybody has an opinion on these subjects, but nobody seems to have any data.

  12. I stopped at “mean”. Means tell us nothing as long as the bigwigs on Wall Street and among the hedge fund managers are Ivy grads.

    You need to look at major vs. major and at what graduate path each student went down. If you can prove to me that two students with similar SAT scores who both got, say, engineering degrees from a prestigious private school and a good state school would have significantly different earnings at age 28, I’d be far more interested.

    Also, as someone who transferred from an Ivy to a big state school out of choice, comparing students who got into an Ivy and a top state school and picked one or the other is going to show a huge difference in personality. Think about what that says when a student chooses not to go to a top school, or chooses to leave a top school. That person likely has very different priorities. I would instead look at students with similar scores and GPAs who only get into one or the other, to remove this selection effect.

  13. ““High school graduates can make perhaps ~$30k a year.”

    Another anecdote: the only people who work in my building who can afford to eat in the cafeteria every day (lunch ~$15) are the contractors and construction guys working on it. All the PhDs are brown-bagging.

    I’d be interested to see how tradespeople in general sort out from “high school education.” A plumber in my area makes $85 an hour.

  14. @Dave

    Which Ivy and which state school?

  15. Harvard and the University of Illinois.

    And I was not (and had never been) an Illinois resident.

  16. David,

    This is a sample of TN residents. I doubt there are very many hedge fund managers here. I, too, would prefer median income, but I hope you’ll agree that it’s unlikely that the choice of mean/median is driving the results entirely. Even if were, that would suggest that Pr(superstar) is higher at Ivys, which is important to know.

    The choice of major/graduate path is partially determined by what school you go to. I’m happy to start with this as a first cut.

    I agree that there are personality differences, that even the Krueger/Dale results are vulnerable to. However, your cut would introduce an alternate bias — people who don’t get into Harvard are different from those who do.

    Anyway, I’ll happily agree that these results overstate the *pure* results of going to an Ivy, given the fact that people who choose to go to Ivys are different. But I think the scale of the effects, the strong relation to US News rank, and the fact that they persist in the Krueger/Dale results all suggests at an actual link. As Iceman points out, the benefits that come from Ivy connections are probably pretty strong.


    There was a paper a few years back that suggested the fact that College grads end up in cities with expensive housing reduced the value of the College premium.

  17. Thorfinn,

    I’m not convinced my cut would introduce alternate bias, so much as it might narrow the sample to a point where accurate data might be harder to get. I’d even be willing to settle for just separating out students with similar resumes, some of whom got into Ivies and some of whom didn’t. Because of the Ivies’ selection policies, there are many such students who are qualified to attend but who don’t simply because there aren’t enough spots. (This is much less likely to happen the other way ’round.)

    It *is* likely that networking has an effect on Ivy grads’ salaries, at least in some fields. And among those fields are high-earners like law, finance, and business. So I’m not claiming that what the data appears to show *isn’t* true – just pointing out that they *haven’t* actually controlled for all possible factors and have chosen to present their data in what I feel is a questionable manner (mean vs. median).

    And since I’m already writing this, I will address the issue of investment bankers or hedge fund managers or whatever. The income distribution has a long tail in any state (even Tennessee!) so even a few outliers can significantly alter the results. Consider a sample of 1,000 college graduates making 50K a year. Throw in one guy making 5 mil and the average goes up by almost 5K. Sprinkle a few CEOs in there and it’s going to completely skew the mean – you don’t need to involve Wall Street at all. Not to mention the fact that, in the Internet age, we’ve got big earners living and working all over the country, not just in NYC.

  18. What’s the median household income for the parents of those at top-ranked schools?

    From my experience, Ivy-leaguers are disproportionately from wealthier families.If you consider people who choose public U over Harvard, a lot of the selection effect you will see will be between kids from wealthy families and those from middle-class or below families. If your parents make 50k / year, you would probably much-rather take a free ride at state U in their honors program, than shell out the money for the financially burdensome tuition at Harvard.

    Being from a wealthy social circle must play some part, although I don’t doubt that there are effects from going to the school as well…

  19. It would be useful to correct the data for parents’ income and social status for the same universe of graduates.

    Privileged parents steer their children to the high-ranking schools. Perhaps the same children would be as likely to become highly-paid 25-year-olds if they spent their undergraduate years at lower-ranking colleges. Privileged parents steer their children to the high-ranking schools.

    And Razib– what do you mean by “RE-impose” quotas for Jews in undergraduate admissions?

  20. How do we know that those who go to Ivy League schools wouldn’t do just as well as if they went to other schools? It seems to me that if you’re smart you’ll do well. If you’re smart you’ll get into an Ivy League school. Perhaps going to an Ivy League school isn’t a prereq for making money, but just an indicator of intelligence.

    Since Ivy League schools and top ranked schools have set the bar higher for admissions, it’s natural for them to have a higher mean starting salary because they have more smart students.

    I’d like to see a study that shows all the people that got into top-ranked schools but declined to go in favor of lower ranked schools and where their mean salaries are.

  21. Take out top 5% earners and that exponent becomes radically less steep. In my field, quality of undergrad education at Harvard is in no way better than that of any solid public university. Much worse than at many universities, in other words. Harvard graduates, however, are on average appreciably better on average in quality than those from large public schools when it comes to things post-graduate. Simple selection and credentialism. That non-linear relationship on the graph might also be called “it pays to be smart”.

  22. Go to the web sites of venture capital, private equity or hedge funds, or of Goldman Sachs, and you’ll find that HYPS alums, plus a few Ivies, plus MIT and Caltech, are grossly overrepresented. (Equivalently, look at the founding teams of most startups.)

    Most top firms only recruit at a few schools. A kid from a non-elite UG school has very little chance of finding a job at one of these places unless they first go to grad school at (e.g.,) HBS, HLS, or get a PhD from a top place. (By top place I don’t mean “gee US News says Ohio State’s Aero E program is top 5!” — I mean a math PhD from Berkeley or a PhD in computer science from MIT — the traditional top dogs in academia.)

    This is just how the world works. I won’t go into detail, but it’s actual somewhat rational for elite firms to operate this way — a Harvard guy knows how the filtering works at his alma mater and at similar places so he trusts it. Plus, at the far tail of ability I would guess the top 10-20 UG schools grab almost 50 percent of the pool.

    I teach at U Oregon and out of curiosity I once surveyed the students at our Honors College, which has SAT-HSGPA characteristics similar to Cornell or Berkeley. Very few of the kids knew what a venture capitalist or derivatives trader was. Very few had the kinds of life and career aspirations that are *typical* of HYPS or techer kids. At the time I took the survey almost 50 percent of the graduating class at Harvard was heading into finance. You can bet that the average senior at Harvard knows what Goldman Sachs is (and even what it means to make partner there), that Mckinsey is so over (relative to careers in finance), what the difference is between a Rhodes, Marshall and Churchill scholarship, etc. etc. Very few state school kids do … Last year a physics student at Oregon won a Marshall to go to Cambridge. The administrators were happy about the PR. I had a conversation with a vice-provost about how to ensure a steady pipeline of such candidates — but there are not the resources, institutional understanding of the process, etc. (let alone pool of able kids) to turn UO into a Rhodes/Marshall/… machine like Harvard.

    Now tell me that peer or network effects don’t matter. Controlling for SAT may account for much of the variance in well-established careers like medicine or even law, but for the very top jobs (which count disproportionately toward income inequality), kids at elite schools have huge advantages. Guess where I will send my kids (assuming they can get in)?

  23. To see the elite / non-elite divide most starkly, look at the probability of (earned) net worth, say, $5-10M by age 40. This cuts out almost all doctors and lawyers and leaves finance, startups and entertainment (i.e., movies or television; let’s ignore sports). Even after controlling for SAT, I would guess elite grads are 3 or maybe even 10 times more likely to achieve this milestone.

    Obviously this kind of assertion is difficult to back up with hard data or academic studies. In fact, most academics don’t know all that much about how the real world works. David Kane, one of the contributors to this blog, is an exception, and I would like to hear what his take is on all this. I bet he agrees with me as long as I add Williams College to the list of elites: HYPS —> HYPSW :-)

    My bona fides (why I think I know something about this topic): BS Caltech, PhD Berkeley, research fellow at Harvard (lived among undergrads and tutors in Dunster House), Prof. at Yale, Prof. at U Oregon, Silicon Valley startup founder, consultant to VC funds, recruited more than once by Wall St. firms (derivatives and prop. trading).

  24. C.J. and DK,

    If read my post, you would see that I address the selection issue by looking at a study of students that were accepted at selective schools and chose to go/not go.


    Thanks for your insightful comments. My only point of disagreement is “McKinsey is so over”. My experience is that consulting still draws a large number of elite graduates, especially those that hope to go into business careers.

  25. If you look at the income distribution even of the top schools you will see a massive spread. Basically, some people go to Wall Street and others do not.

    Most 18-21 year olds are not very Wall Street focused, but when recruiting rolls around in senior year it matters very much how many of your friends decide to go into finance, and how hard finance is pushed by the Recruiting office. Or if you prefer, how convenient Wall Street firms make it to join them.

    This may explain all of your observed data. It will also explain why the Harvard acceptee who goes to UMass ends up making less as well. Goldman Sachs is just not so big at that Boston university

  26. There are too many variables for the data in graph to show any worth while. I think the the graph would look completely different if you were to only considered students in each college who had roughly the same SAT score. Is the salary of a college graduate dependent on the intelligence and motivation of the individual or heavy impacted by which college they attended?

  27. I like Hanson’s idea to avoid paper bias — and kudos to you for using it and giving credit.

    Can you post the data tables from Krueger & Dale?

    Also — what about network effects? That would certainly lead to nonlinearity — and Morgan Stanley certainly didn’t come to my school (#75) to recruit.

    You could test that by looking at regional output in the nearby regions of various schools (Colby College v UC Berkeley).

    #75 is the low outlier. :( And I’m making even less than that figure, aged 28. :(:( What’s more, I was wait-listed at the one top school I applied to. Now every time I’m ignored by an investment bank or consultancy, I kick myself for not shelling out the extra $50 to apply to another Ivy.

    (Although I bet my business acumen is better from spending 5 years around *normal people* instead of

    More bitterness:
    Many, many adults at school #75 told me that smart kids (like me) from #75 are very comparable in intelligence to typical top-10 kids and will achieve the same.

    Yet I am not seeing any such success. I’ve wormed my way into some decent-sounding positions but never with job security, control over my earning power, or leverage.

    What fascinates and irks me is people who perform terribly and still haul down fat salaries. This goes from programmers up to CEO’s. The trick seems to be to get into a principal-agent situation (boss is spending other people’s money) and convince the boss that you’re awesome (Ivy degree or MBA help). Then performance doesn’t matter. Your outside option is still there because another similar situation exists regardless of performance.


    Interesting related tangent:

    Another related topic I hope you’ll cover: proliferation of industry-specific masters’ degrees — e.g. Actuarial, Development Studies, Public Health. These seem to me to be the students hoping to buy a job and the universities hoping to fleece the daylights out of the gullible / cowardly.

  28. Well, IQ distribution is the answer to this finding. A bell curve within bell curve.

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