A Powerful Door Opener

Mike Norman
They might not be guaranteed passports to wealth and success, but they’re pretty darn valuable nonetheless. I am talking about degrees from one of America’s elite colleges. Though critics have long argued that paying the high cost of attending these schools may not be such a good investment, statistics suggest otherwise.

According to the National Center for Education Statistics (a federal entity within the Department of Education that collects and analyzes data related to education in the U.S. and other nations), a degree from a selective institution was associated with an earnings increase of up to nearly 20 percent compared to non-selective institutions.

And it could open far more doors.

In a study conducted in 1999 Alan Krueger, a Princeton economist, and Stacy Berg Dale, a researcher at the Andrew W. Mellon Foundation, attempted to be disprove the idea of the prestigious school advantage. Instead, their work found that graduates of Ivy League or similar institutions earned more on average than students that graduated from less selective schools.

One reason this may be true is because the characteristics necessary for admission to these schools are often characteristics that are sought after and rewarded in the labor market. Those characteristics include intelligence, discipline, imagination, ambition, perseverance, maturity and competitiveness.

Finally, don’t underestimate the valuable connections that often flow from being a member of an elite “club.” It can be a powerful door opener.

This weekend our Business Block has much more on the price of college and other skyrocketing costs of living. Tune in Saturday 10am — noon ET.

Mike Norman is the founder and publisher of the Economic Contrarian Update and a frequent guest on the Business Block.