Does college selectivity have an effect on graduates’ long-term outcomes?
Assessing the payoff to attending an elite university is difficult because elite universities admit and attract students that would have great earnings capacity no matter where they go to college. In addition to observable admissions credentials, there are two sets of unobservable factors that correlate with both long-term success and attending an elite school. The first set are the ones admissions committees observe but researchers cannot (enthusiasm, extracurricular activities, excellent writing). The second are characteristics that are latent even to the admissions committee, but nevertheless make a subject more likely to apply to and attend an elite college as well as to succeed in his or her career (ambition, more accurate assessment of one’s potential). Without controls, these factors would cause ordinary regression analyses to attribute a greater effect to the selectivity of a college than is actually operating.
The authors of the studies below address the selection bias using a range of methodologies, and find that contrary to the conclusions from the bulk of existing literature on the subject, college eliteness makes little difference in terms of long-term earnings potential.
Neither of the papers thoroughly address potential mismatch effects. At first blush, the findings might seem to contradict mismatch—after all, if the prestige of an institution doesn’t have any impact on earning potential, then it would follow that a college graduates’ earnings are related to his incoming ability, but not his incoming credentials relative to his peers. However, because neither paper performed within-race matching techniques, the effect of a significant disparity in incoming ability (as opposed to a disparity that’s within the range typical for non-preference admits) has not been tested. However, the papers do provide important insight for education policy: in designing effective education policy, we probably tend to exaggerate the true utility of attending an elite college.