Harvard commencement -- look at all that earnings potential. (Ian Lamont/Flickr)

For the kind of student who stresses over Ivy League college applications, economists have some good news: Attending an “elite” institution probably won’t have much impact on your future earnings.

The best research on this subject comes from Stacy Dale and Alan Krueger, who have shown that after controlling for individual ability, the selectivity of your alma mater doesn’t particularly matter. Their work, which has been widely publicized, has also been somewhat misunderstood.

At first glance, the data analyzed by Dale and Krueger shows a clear advantage to attending a top college like Yale or Williams. Between students with similar SAT scores and GPAs, the ones who end up at more selective institutions earn more after graduation on average.

But that’s because SAT scores and GPAs give an incomplete picture of a student’s potential. It’s hard to measure things like grit, or creativity — or intelligence that’s literally off the charts. When elite applicants have indistinguishably sterling transcripts, top colleges have to use other information, like teacher recommendations, personal essays, and participation in extracurricular activities.

Knowing this, Dale and Krueger came at the data from a different angle. They looked at students who got into top colleges but didn’t go. These students didn’t seem to suffer by attending less-selective schools. Apparently, an acceptance letter from Stanford was as good as attending Stanford.

Here’s where it gets stranger. Upon further investigation, Dale and Krueger found that it didn’t even matter much what schools students got into. Just knowing the kinds of schools that students applied to was sufficient to predict how much they would later earn, given their GPAs, SAT scores and demographic data.

From Dale and Krueger’s research we might draw two conclusions. First: People follow predictable paths, and you can learn a lot about them just from a snapshot of their lives halfway through their senior year in high school. Second: It’s not clear whether going to a fancy college actually makes much of a difference to your earning power (at least for white students, but we’ll get to that caveat in a bit).

It’s worth thinking about Dale and Krueger’s work in light of recent research from Jonathan Wai, a psychologist at Duke who studies high achievers. Wai’s work, published in the journal Intelligence, examines the educational backgrounds of elites in America. Wai is particularly interested in people who attended top colleges and graduate programs, and how they are represented in various rarefied circles.

For the purposes of his research, Wai defines “elite” schools to be the ones with the highest average incoming SAT, LSAT or GMAT scores. The full list includes 29 undergraduate institutions, 12 law schools and 12 business schools. It’s a fairly wide swath of colleges, from CalTech, Princeton and Yale, to Carleton, Johns Hopkins and Cornell.

This is some data from Wai’s 2014 paper:

It’s no surprise that people with degrees from fancy schools are overrepresented in elite society. Among American billionaires, Fortune 500 CEOs and federal judges, about 2 in 5 have a bachelor’s, MBA or law degree from an elite school.

But these gilded résumés aren’t scattered evenly across fields. Only a fifth of House members went to elite schools, for instance — while among the Davos set, you’d be in the minority if you didn’t spend time at a top college or grad program.

To put these numbers in perspective, here’s some very rough math. Consider that in the early '90s, about 1.2 million people received bachelor’s degrees a year (the number is closer to 1.9 million now). The elite undergraduate programs on Wai’s list probably produce about 40,000 graduates a year — or about 3 to 4 percent of the annual supply of bachelor’s degrees back in the day. (The number is probably closer to 2 percent now.)

Now, we’re only looking at undergraduates, while Wai also includes people who went to elite law or business schools. But — again, roughly speaking — it seems that graduates of top-30 colleges are 10 times more likely than graduates of other colleges to occupy elite positions in society.

How you interpret this information says a lot about your views on how opportunity works in America. Wai argues that these figures offer insight into the relative importance of intelligence in various careers.

“A lot of people don’t realize that the SAT can be used as an intelligence test,” he says. “If you look at colleges with the highest SAT scores, those students are likely in the top one percent of cognitive ability.”

In a paper published in October, Wai studied Fortune 500 CEOs in detail, observing that CEOs who went to fancy schools tended to helm companies with higher revenues. "You could argue that maybe these are smarter CEOs, who do something to impact their gross revenues," Wai says. 

Another view is that Wai’s data offer a portrait of nepotism. The teaching at an elite college is probably not much better, but students there get access to powerful social networks. Parents who send their kids to Ivy League schools expect them to be roommates with future senators, judges and business titans. And they expect the elite-college brand to confer a competitive advantage.

Here’s another chart from Wai’s 2014 paper, which reports the percentage of people who got an undergraduate, business or law degree from Harvard:

About 12 percent of federal judges, senators, and billionaires have Harvard degrees. Are Harvard grads overrepresented in elite society? It comes down this question: Do you believe that 12 percent of the smartest, most capable people in the nation attend Harvard at some point in their lives?

To sharpen the point: Consider that the nine sitting Supreme Court justices all attended either Harvard or Yale Law School. (Ruth Bader Ginsburg started at Harvard and finished at Columbia.) Does it make sense that basically all of the best lawyers in the nation pass through either Harvard and Yale?

Maybe, maybe not.

We began by talking about research that suggests fancy colleges confer close to zero special advantages to students of similar ability. There’s an important caveat: Fancy colleges do seem to benefit students who are black or Hispanic, and students with less-educated parents. The economists speculate that fancy colleges are an important way for these students to gain access to elite social networks.

It’s also worth pointing out that Dale and Krueger looked only at earnings and not other aspects of achievement. It’s prestigious to be a federal judge, for instance, but it doesn’t pay particularly well compared to other law jobs. The same could be said for careers in academia and civil service. Having a degree from a highly ranked institution might benefit someone who wants to climb those ladders. So there are reasons that getting in to a top college might be a rational goal.

Wai’s research puts numbers to a fact that every helicopter parent knows: America’s elite are loaded with degrees from fancy colleges. His data can’t tell us whether these degrees contributed to their success, but these charts make an important point about the dominance of America's top schools. There's a problem of perception: The most promising American high school students still flock to certain schools because the correlation with future success seems so strong.