Question: do elite institution degrees confer any addition to market value commensurate with their cost, or do they simply select for people who already have high market value?
It’s been studied some and there's at least some substantial evidence that it's the latter. (I posted this on another thread last week.)
> For most students, the salary boost from going to a super-selective school is “generally indistinguishable from zero” after adjusting for student characteristics, such as test scores. In other words, if Mike and Drew have the same SAT scores and apply to the same colleges, but Mike gets into Harvard and Drew doesn’t, they can still expect to earn the same income throughout their careers. Despite Harvard’s international fame and energetic alumni outreach, somebody like Mike would not experience an observable “Harvard effect.” Dale and Krueger even found that the average SAT scores of all the schools a student applies to is a more powerful predictor of success than the school that student actually attends.
I'm not familiar with this study in particular, but there's another similar one for the elite NYC public high schools, which have historically had a similar "halo effect" attributed to them. They found that the student cohort that "barely made it" had similar long-term outcomes as students who "barely missed out".
I came away thinking that parental influence is the most important factor. If your child is well-nurtured enough to be within a crap shoot of selection for an elite institution, it probably doesn't really matter if they get in or not, they'll be successful regardless (for mysterious reasons that may be interesting to know, but don't really matter).
As such, it's better not to make your kid focus on "getting in" (which is a suspect goal for many reasons), but instead on trying their best to realize their full potential.
It is not the degree that is valuable, it is the network it allows you to access that is valuable. The classmates you have at certain institutions will increase the probability of you achieving certain goals.
The thing is that you frequently end making connections with alumni of those institutions in your first few corporate jobs, since they all recruit out of the same pool of elite universities. So even if you didn't go to Stanford or MIT, if you work at Google (well, in the 00s - it doesn't focus nearly so much on elite universities now) you will know people who went to those schools, and if you need to make a connection with another alumnus of them you can reach out to your friends and say "Hey, can you connect me to your classmate?"
> "Question: do elite institution degrees confer any addition to market value commensurate with their cost, or do they simply select for people who already have high market value?"
Speaking only for STEM, an elite STEM program gives the student access to a bigger variety of upperclassman courses; compare the available course list for a community college vs a large university and the difference is quite noticeable. The better programs also provide access to better equipment and advising; e.g., various University of California campuses have their own on-site chip fabrication labs. If the career trajectory you're planning benefits from those advanced courses, going to the better STEM programs is going to help tremendously. If not, well, they don't but that's hardly the institution's fault; they aren't choosing who to send your resume to, you are.
(As an aside, I use the word "access" very intentionally; educational institutions don't "confer" anything. Students get access to resources and opportunities and they choose which to take. It's entirely possible to do the minimum to fulfill requirements; for example, I chose easy courses to do the minimum fulfill my humanities requirements because it wasn't where my interests lay.)
I'm sure it depends some on the degree. A very sharp friend of mine got an aeronautical engineeering degree from a good state school. After a few years in industry he went back for a brand-name MBA. He said in 2 years of school, he learned exactly one thing that he couldn't have just figured out via general knowledge and a bit of thinking. [1] He said the real value was in the network he built up, people who would soon be placed in important positions in important companies all over.
And I should add that in an age of increasing inequality, a network with a lot of elite members will increase in value much faster than inflation. So the value of an elite degree might still be a bargain even at the current prices. Which probably explains why there's a lot of bribery, legal and otherwise, by the rich trying to get students into brand-name schools.
Private elite institutions (Yvies) offer excellent education, and networking with really rich people ;). Some people already had that, some will make economic use of it, and some not. I assume the variance within-group is very very high, so you can probably calculate stats to defend any point. And then the cost also varies, so ...
'Elite' state schools (GA Tech, Michigan State? Etc) probably have excellent ROI.
Expensive, not really elite schools are probably not worth it on average, but again, cost varies highly, so ...
My impression is that elite institutions generally do not have a higher cost than the reasonable alternatives, so there's no need to justify if it's worth paying more for them as you're not paying more. Their credential value is strongly linked to their selection, but if they do select you, studies there can be more affordable than a "lesser" institution, especially because they are mostly funded not by your tuition fees but rather by the endowments of their alumni, so indirectly through your future income.
The highest cost seems to be for good-but-not-best institutions that have some specific niche/selling point for them but are not particularly selective and will accept almost anyone who will pay their price.
Like, if some school wants to build a reputation for having the best scientists or lawyers then they have to be somewhat selective with respect to performance and have very competitive admissions, but you also need to ensure that the particular young students with most potential can actually afford to study there; but if a school just wants to provide a good education in X and does not care who will enroll, they can just ramp up the fees until the applicants filter themselves out.
Elite institutions could do nothing and still add market value simply by colocating people with high market value who meet each other and create lasting networks and friendships.
I do think that on top of that, they add value because students can be given more challenging and stimulating coursework. The difference in Math education between a top college and a college with loose entry requirements is staggering - we're talking people doing hard proofs freshman year vs. undergrad seniors taking upper level math courses that don't even have proofs, just computation.
One dimension: In my experience one of the most valuable aspects of attending an elite institution is that many of the most prestigious, high-paying, career-accelerating jobs in the US recruit primarily or exclusively at top colleges, and this creates numerous opportunities for their students.
On one hand, the exclusive job opportunities are providing value to students which can allow students to increase their value. On the other hand, the employers are benefiting from the fact that the universities themselves are selectively gathering people with high market value. Exactly how much of whether it's the former or the latter is an open question. Whether or not a university is an expensive platform to pass a corporation's gatekeeping is questionable.
Good question. This has been studied a lot and the answer is…unclear.
I think the kind of longitudinal studies needed combined with a small “treatment” group make this kind of investigation as hard to do as a nutritional study.
