The Economist just released its first-ever college rankings, but the results aren’t just another list of elite schools you’ve seen before.
Staying true to its name, The Economist sought to determine a college’s “economic value.”
No points are earned for good food, nice dorms, or even engaging professors. Instead, the ranking takes a novel approach: it estimates which schools realistically boost graduates’ salaries.
To start, it should be noted that, according to this economics paper, students who attended elite schools did not make more money than students who were accepted into those same schools, but chose less prestigious institutions.
This result seems to suggest that earning potential may be more influenced by factors other than school selection — like student intelligence or any variety of demographic factors.
So the economists at The Economist hoped to determine which schools actually gave their alumni an earnings boost over what those schools’ attendees would be expected to make had they finished college elsewhere.
In other words, the ranking tries to determine the earning potential of a school body in a vacuum, and then compares that to real earnings to see which schools over- and underperformed.
The result: the Otis College of Art and Design comes right after Harvard in this ranking, because its alumni earned a median of $US42,000 per year — $US13,052 more than what The Economist’s model had estimated the grads would make, placing Otis at 5th in the rankings.
But, the way The Economist produced its rankings — and its implications for our perception of college economics — may be even more insightful than the rankings themselves.
To determine a school’s expected earnings, The Economist used a number of variables in their estimation methodology, including SAT scores, racial breakdown, school size, public-versus-private, subject matter, wealth of the state in which the school is based, proximity to a ranked business school, Pell grant percentages, and whether or not a school is a liberal arts college.
Here’s what all of that boils down to — the 1,308 four-year (non-vocational) colleges with data available for these variables were extrapolated to determine the weight that these factors had on earning potential.
Then, from the model that the analysis produces, each school was assigned an estimated earning value that can be compared to the real median earnings for that school.
In layman’s terms: using all the data on these schools, a model was developed that says “students like those at XYZ college should earn this much, based on these statistics about the student body and how those values generally affect earnings.”
The final rankings are then less useful for finding a cultural fit, or even the best value because tuition plays no role in the rankings.
So, it’s eye-opening to see that, according to the model, the SAT scores of Harvard students account for a $US25,080 increase in estimated earning potential. While, in contrast, the students at Drake University — another top-ranking school in this list — might have made up the $US2,207 they were docked if the school were located somewhere a little more happening than Des Moines.
Ultimately, the rankings are intended “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.”
Even in that case, readers are warned that the data provided by the Department of Education is unrepresentative: only students who applied for federal grants are included and that, in some careers, salary 10 years after entering college is far from peak.
The hard data on actual earnings, along with a great deal of demographic information, was available through the Department of Education’s College Scorecard website. In particular, the ranking looks at the entering class of 2001 and that class’ earnings in 2011.