How Much Value Does an “Elite” College Provide?

How far will a degree from an elite college get you? A new working paper (ungated version here) from Kevin Lang and Erez Siniver tries to answer that question by?examining labor-market outcomes for Israeli students at Hebrew University (a leading university) and the College of Management Academic Studies (a “professional undergraduate college”). The authors found that a degree from an elite college will help you get a foot in the door, but skill quickly triumphs. “Our results support a model in which employers have good information about the quality of HU graduates and pay them according to their ability, but in which the market has relatively little information about COMAS graduates,” the authors conclude. “Hence, high-skill COMAS graduates are initially treated as if they were the average COMAS graduate, who is weaker than a HU graduate, consequently earning less than HU graduates. However, over time the market differentiates among them so that after several years of experience, COMAS and HU graduates with similar entry scores have similar earnings. Our results are therefore consistent with the view that employers use education information to screen workers but that the market acquires information fairly rapidly.” [%comments]

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  1. Eric M. Jones says:

    Another bogus study. This is not a black and white problem. It is hard to measure the relative “value” of a particular college, but it is probably best done by future earnings. It is a market of sorts, you know.

    I’d bet Poupon U. vs Harvard would be no-contest.

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  2. geek says:

    why israel, again?

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  3. matt says:

    However, if you looked at Wall Street jobs, I would be willing to bet that you will find a larger proportion of ‘elite’ school graduates. And if you compare Wall Street salaries for similar jobs (at the same skill and performance level) in other industries, there’s no contest who is paid better. So while I agree with the findings in the noted study, I believe there are exceptions where the right college gains you entry into a system (in my example, Wall Street) where the return on the investment is quite worthwhile.

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  4. mary says:

    I’m not sure that I understand your article examples. Which university is supposed to be the “elite” institution? It also doesn’t make sense that if one group started off at a higher income level, things would even out across the years. Why wouldn’t the first group continue to have a higher income level simply because of the fact that most people don’t take pay cuts when moving forward in their careers, but tend to build upon their previous salary levels?

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  5. Michael Ball says:

    You can’t get paid at all if you can’t get your foot in the door. And today, that’s not easy even when some have 20+ years and an advanced degree from an elite school.

    Also, when factoring in the cost of elite schools (especially for undergrad), is the average aid package figured in? Because many people receive excellent packages making the cost near many (more selective) state schools. And for those who don’t need aid, a good number simply just have the money to spend. I don’t see how you can measure the value of something like that when the overall cost and the comparative costs to families differs so widely.

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  6. Adam says:

    An elite university is good for “only” a foot in the door? A foot in the door is absolutely necessary. You can’t lead the team if you never get to try out.

    I’d be interested to see the numbers on what percentage of HU-educated applicants get an interview in the first place, versus what percentage of COMAS grads do.

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  7. jonathan says:

    A study of academics found the prestige rating of the grad school had a 10 year effect on earnings for people going into academia. The length of the effect should vary by field – turnover, numbers of job openings, etc.

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  8. DrakeBullet says:

    Perhaps its time to quantify what the elite college degree does:
    – Shows ability to get grades and compete for them
    – Places you elbow to elbow with others like you
    – Allows for the creation of relationships with like-minded, ambitious people

    But just as hard work (resulsts) trumps talent over time, a degree from an elite university holds its value only if paired with ongoing results.

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