I saw in the news this week that tuition at Duke University next year will top $40,000. Damn, did I love my time at Duke and I think I had an absolutely terrific education, but no way is it worth that much. Having taught at state schools for many years, I don’t have a lot of illusions– no, even the best ones are probably not going to give you as good an education at Duke. But, the greater value of a Duke (or similar elite private university) education certainly isn’t worth the 5-6 times more than in-state at UNC or a similar school. Again, I think my Duke education was fabulous, I’m grateful for it, and I don’t think it can truly be replicated in a top state school, but it is really hard to argue for it in cost/benefit terms. In fact, the latest research shows, that in pure cost/benefit, it’s a big loser. Smart kids who go to state schools earn just as much money later in life (from the Times Economix blog):
A decade ago, two economists — Stacy Dale and Alan Krueger — published a research paper arguing that elite colleges did not seem to give most graduates an earnings boost. As you might expect, the paper received a tonof attention. Ms. Dale and Mr. Krueger have just finished a new version of the study — with vastly more and better data, covering people into their 40s and 50s, as well as looking at a set of more recent college graduates — and the new version comes to the same conclusion.
Given how counterintuitive that conclusion is and, that some other economists have been skeptical of it, I want to devote a post to the new paper.
The starting point is the obvious fact that graduates of elite colleges make more money than graduates of less elite colleges. This pattern holds even when you control for the SAT scores and grades of graduates. By themselves, these patterns seem to suggest that the college is a major reason for the earnings difference.
But Ms. Dale — an economist at Mathematica, a research firm — and Mr. Krueger — a Princeton economist and former contributor to this blog — added a new variable in their research. They also controlled for the colleges that students applied to and were accepted by.
Doing so allowed them to capture much more information about the students than SAT scores and grades do. Someone who applies to Duke, Williams or Yale may be signaling that he or she is more confident and ambitious than someone with similar scores and grades who does not apply. Someone who is accepted by a highly selective school may have other skills that their scores didn’t pick up, but that the admissions officers noticed.
Once the two economists added these new variables, the earnings difference disappeared. In fact, it went away merely by including the colleges that students had applied to — and not taking into account whether they were accepted. A student with a 1,400 SAT score who went to Penn State but applied to Penn earned as much, on average, as a student with a 1,400 who went to Penn.
There you have it. Of course, there’s plenty to be recommend for a Duke, Yale, Williams, etc., education beyond future earnings (personally, I believe that the academic rigor at Duke, the overall educational environment, and the amazing quality of my peers and professors gave me an educational experience that most certainly cannot be summed up by dollar and cents). Where I would ultimately come down is that if one can afford an elite private education without a major financial sacrifice, go for it, there’s nothing better. But, if cost needs to be brought into consideration, as it certainly does for most, a top state school is certainly the way to go.