

Revisiting the Value of Elite Colleges - tokenadult
http://economix.blogs.nytimes.com/2011/02/21/revisiting-the-value-of-elite-colleges/

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tokenadult
The comment of the economics professor who conducted the new study:

"My advice to elite colleges: Recognize that the most disadvantaged students
benefit most from your instruction. Set financial aid and admission policies
accordingly."

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Alex3917
Not likely. The only reason the elite colleges are elite is because they try
their best to only admit the students who will be helped the least.

~~~
lurker19
In the past five years, Ivy League schools have massively increased financial
aid to make tuition negligible for students of median (or lower) income
families in the USA.

There will always be a "legacy super class" contingent, and much has been
written about why this is good overall (1. it helps the school stay funded; 2.
it is good for morale to have the bottom quartile of GPA be filled with people
who are happy there), but elite schools are not exclusivly upper-class in this
century.

Also, it is worth noting that Ivy League schools go to extreme efforts to
democratize and "socialismise" their student bodies, through dormitory and
dining and academic arrangements, much more deeply and intentionally than
public schools.

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arjunnarayan
Slightly more technical detail from the paper: Essentially, the paper uses the
instrumental variable[1] of "which colleges did you apply to" to create a
rough metric of applicant-confidence/pedigree. They then find that this
indicator better explains an earnings gap between college graduates than
simply looking at which college you attended.

Namely, the simple fact that you thought you were good enough for MIT (even
though you may have been rejected and went to a slightly worse school) is a
larger predictor of future success than actually going to MIT.

Where this assumption doesn't hold is for minority students though. I won't
get into that because its complicated and I'm not sure I fully understand the
subtleties there. But focusing on the main point; I think the conclusion would
resonate very well with the HN community: that simply applying to top tier
schools boosts your expected income because it reflects something innate about
you --- some kind of self-confidence that helps you throughout life.

This seems similar to a study[2], which I believe (I am going by memory here
and this was a while ago) was discussed in Steven Levitt's Freakonomics[3],
where the authors found that in places with really crummy schools; where
sometimes there were lotteries to get into charter/magnet/better schools; that
people who won the lottery didn't have better outcomes than people who lost
the lottery. The theory was that the lottery outcome didn't matter so much as
_entering_ the lottery: because entering the lottery signified that the
student had parents who cared enough about your education to enter you in the
lottery... And in the long run this matters far more than going to a better
school. All in all, a cool use of instrumental variables for the inner
academic-economics nerd in me.

[1] <http://en.wikipedia.org/wiki/Instrumental_variable>

[2] <http://papers.nber.org/papers/w13443>

[3] Going off on a tangent here, Levitt really took the study of various
previously unmeasurable phenomena via the use of instrumental variables to a
new level. Some people argue as to the merits of this technique and whether it
actually is very insightful. Critics deride it as statistical sophistry taken
to the point of being almost useless in assigning causal inferences. I'm
somewhat torn. I spent a while reading tonnes of instrumental variable
studies, and while there are a significant set that are confusing and probably
not very useful, it does seem on average a legitimate statistical technique,
albeit with very subtle problems that need to be handled well. For more on
this controversy, there is [4], [5], [6]. While this is a completely
irrelevant tangent to the article, I thought it useful to see and think about
a side of economics that is unrelated to the recent financial mess that
macroeconomists are taking a lot of flack for.

[4] A hit piece on Levitt in the New Republic:
[http://www2.canada.com/components/print.aspx?id=b654079c-3fc...](http://www2.canada.com/components/print.aspx?id=b654079c-3fc5-4e6b-bb03-60ab5f5fd859)

[5] Greg Mankiw's (Harvard Economist) take on it:
[http://gregmankiw.blogspot.com/2007/04/is-steve-levitt-
ruini...](http://gregmankiw.blogspot.com/2007/04/is-steve-levitt-ruining-
economics.html)

[6] Levitt's reply, including mention of Mankiw's analysis:
[http://freakonomics.blogs.nytimes.com/2007/04/25/am-i-
ruinin...](http://freakonomics.blogs.nytimes.com/2007/04/25/am-i-ruining-
economics-or-not/)

~~~
lurker19
I would love for you to rewrite the Instrumental Variable Wikipedia page's
intro to make it comprehensible.

