A new way to rank colleges

So, this is cool.  The Economist has created a college ranking system based on the (economic) value added of a college above and beyond what models would predict their students would earn if educated elsewhere.

The Economist’s first-ever college rankings are based on a simple, if debatable, premise: the economic value of a university is equal to the gap between how much money its students subsequently earn, and how much they might have made had they studied elsewhere. Thanks to the scorecard, the first number is easily accessible. The second, however, can only be estimated. To calculate this figure, we ran the scorecard’s earnings data through a multiple regression analysis, a common method of measuring the relationships between variables…

We wanted to know how a wide range of factors would affect the median earnings in 2011 of a college’s former students. Most of the data were available directly from the scorecard: for the entering class of 2001, we used average SAT scores, sex ratio, race breakdown, college size, whether a university was public or private, and the mix of subjects students chose to study. There were 1,275 four-year, non-vocational colleges in the scorecard database with available figures in all of these categories. We complemented these inputs with information from other sources: whether a college is affiliated with the Catholic Churchor a Protestant Christian denomination; the wealth of its state (using a weighted average of Maryland, Virginia and the District of Columbia for Washington) and prevailing wages in its city (with a flat value for colleges in rural areas); whether it has a ranked undergraduate business school (and is thus likely to attract business-minded students); the percentage of its students who receive federal Pell grants given to working-class students (a measure of family income); and whether it is a liberal-arts college. Finally, to avoid penalising universities that tend to attract students who are disinclined to pursue lucrative careers, we created a “Marx and Marley index”, based on colleges’ appearances during the past 15 years on the Princeton Review’s top-20 lists for political leftism and “reefer madness”. (For technically minded readers, all of these variables were statistically significant at the 1% level, and the overall r-squared was .8538, meaning that 85% of the variation in graduate salaries between colleges was explained by these factors. We also tested the model using 2009 earnings figures rather than 2011, and for the entering class of 2003 rather than 2001, and got virtually identical results.)

After feeding this information into the regression, our statistical software produced an estimate for each college based exclusively on these factors of how much money its former students would make.

The Economist itself does point out the largest caveat:

Finally, maximising earnings is not the only goal of a college, and probably not even the primary one. In fact, you could easily argue that “underperforming” universities like Yale and Swarthmore are actually making a far greater contribution to American society than overperformers like Washington & Lee, if they tend to channel their supremely talented graduates towards public service rather than Wall Street. For students who want to know which colleges are likely to boost their future salaries by the greatest amount, given their qualifications and preferences regarding career and location, we hope these rankings prove helpful. They should not be used for any other purpose.

Nonetheless, pretty interesting.  My own alma mater (Duke) does pretty well– 29th.  I suspect that’s from all those now-rich physicians and attorneys who were my classmates.


About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

One Response to A new way to rank colleges

  1. Jon K says:

    you left out NCSU’s excellent ranking of 1248, which puts us at the 2 percentile level. I would be much more interested in these rankings if they were broken down by college or program. NCSU has a large agriculture school, a large college of education, and programs in forestry management. Of course nobody is going to get rich in those fields.

    i just don’t think that is a very good way of ranking schools. a lot of the kids at private universities have more income, connections, and other benefits of being wealthy before they even started college. I have friends from my prep school who went to Washington and Lee, and they were confident that they were going to go there and then graduate and then take over daddy’s company. I don’t think many students at NCSU come from similar situations.

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