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Physicist, Startup Founder, Blogger, Dad

Wednesday, June 30, 2010

Universities ranked by ROI

MIT, Caltech and Harvard lead the pack. Berkeley is the top public school and beats out Brown, Columbia and Cornell. (Actually, for in-state students, the percentage ROI for Berkeley is the highest because tuition is low.) Full list and methodology discussion here.

These results are using a sample of graduates who only obtained a bachelor's degree and no higher degree. The ROI dollar amount is the *difference* in income between graduates and non-graduates. (See methodology note at link above.)

As noted by commenters, the results don't really isolate the value added by the university -- for that to be the case one would, at minimum, have to control for SAT or IQ score. See here for earlier discussion. The total earnings are almost a proxy for student quality -- I bet these rankings correlate very highly with average SAT score of the school.

Rank
School Name
School Type
Average Cost for College in 2009
30 Year ROI (2010 Dollars)
Annual ROI

1
Massachusetts Institute of Technology (MIT)
Private
$189,300
$1,688,000
12.6%

2
California Institute of Technology (Caltech)
Private
$181,100
$1,644,000
12.6%

3
Harvard University
Private
$189,600
$1,631,000
12.5%

4
Harvey Mudd College
Private
$187,700
$1,627,000
12.5%

5
Dartmouth College
Private
$188,400
$1,587,000
12.4%

6
Stanford University
Private
$191,800
$1,565,000
12.3%

7
Princeton University
Private
$187,700
$1,517,000
12.3%

8
Yale University
Private
$194,200
$1,392,000
11.9%

16
University of California, Berkeley
Public (In-State)
$118,900
$1,223,000
13.1%

6 comments:

EMR said...

The source ranks the schools by income rather than by ROI. Costly schools tend to be in areas where the cost of living is higher and graduates from those schools tend to live in high cost cities where employers have to pay higher salaries. The schools should be listed by ROI. Hence Georgia Tech, Brigham Young, and University of Virginia round out the top three.

Dog of Justice said...

The methodology used in this study is pathetic - there isn't even an attempt at taking student quality into account when computing ROI.

steve hsu said...

It's almost a measurement of student quality ;-)

addicted said...

Actually, Georgia Tech is the "best" public university by % ROI (instate).

And EMR is right regarding the ranking methodology. Using the absolute return amount is certainly not a good way to judge ROI. Not sure if % ROI is really great either, but its certainly better than the difference.

Jonny Good15 said...

Does the cost also take into account opportunity costs? Is this also just taking into account students who only have a bachelors degree for their entire life? If students make an "investment" in med school let's say, than it's kind of cheating to derive ROI from that student, since the result is a result of two variables now.

davebackus said...

People love lists, but it's not clear what this one does. Are we measuring value-added? With most measurement systems for higher education, the way to look good is to have the best students. They're still good when they graduate, but is that value-added? What if a CalTech student had gone to Oregon instead? Would she have done as well? Here the measure is salary, and you can imagine that some fields pay better than others. Is that value-added? It's inherently difficult to measure, and far as I can tell the methodology doesn't address any of these issues. Too bad, it would be nice to see it done well.

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