Story Stream
recent articles

Harvard’s Raj Chetty has a habit of mistaking causation. Not too long ago he astounded the easily-astounded David Brooks with research that “found that poor children who grew up in places where people have more friendships that cut across class lines earn a lot more as adults than children who don’t.” As readers can perhaps imagine given Brooks’s excitement, Chetty mistook the cause of the higher earnings. If you’re hanging around the higher classes, that plainly says a lot about you, your parents, their ambitions for you, and values conducive to success.

Chetty is at it again. He’s “discovered” that attendance at Harvard, Yale, Princeton and other “IvyPlus” colleges matters when it comes to “reaching the upper tail” of achievement. If he hasn’t already written about it, one guesses Brooks soon will. Too bad, simply because Chetty’s finding is yet again nonsense. It implies that the “odds of an exceptional, Bezos-like” financial outcome are improved by education at elite colleges. About this, Washington Post columnist Megan McArdle is seemingly in agreement. Or at least sort of. Her analysis of Chetty’s findings is contradictory.  

Missed by Chetty, McArdle and others who will soon cite this study is that Jeff Bezos’s attendance at Princeton logically had nothing to do with his eventual success. Really, does anyone seriously believe Bezos majored in “e-commerce” while at Princeton, only to turn his higher learning into Amazon? The reality is that Bezos invented e-commerce after attending a college housing professors who, if they’d ever heard of the notion of e-commerce, would have scoffed at it. Same with most of the world’s most successful investors. Lest Chetty, McArdle et al forget, for the longest time Amazon was “Amazon.org” to in-the-know investors.

What about Harvard dropout Mark Zuckerberg? Was he privy to extra special learning while in Cambridge? No, once again. Zuckerberg and Bezos were already smart, hence their matriculation to Harvard and Princeton. Only for Zuckerberg, like Bezos, to start Facebook in the face of massive investor skepticism. And if you doubt that, just look up how much it cost Peter Thiel to purchase 10% of the formerly dismissed (doubtless by Harvard and Stanford MBAs) social network.

Looking beyond extreme success, McArdle’s complaint is that the elite schools that favor the kids of the rich are pipelines to Goldman Sachs and other elite companies. McArdle’s lament is true, but only to a point. Indeed, McArdle and Chetty both miss that GS is ruthlessly quantitative about actual talent, and is even more ruthless about letting go those who don't measure up. Translated, Harvard at best gets you in the door. It pays no bills after.

So, while Chetty is likely convinced of the genius of his latest research, McArdle sees the holes. She notes that “of America’s 10 biggest companies,” only Amazon “is helmed by an Ivy Plus graduate.” Yes, what you learned on campus from professors wholly distant from the real world of commerce is meaningless to achievement. Only for McArdle to contradict the previous point with a lament that IvyPlus favoritism for rich kids “deprives talented kids of opportunities they deserve – and deprives the rest of us of the fruits of their potential.” McArdle might explain what they learn that has anything to do with real-world achievement in a future column.

For now, it’s difficult to know what McArdle thinks. While she recognizes that an IvyPlus background isn’t necessary, she concludes with a complaint that IvyPlus education means that we’re “outsourcing the creation of our elites to some unknown bureaucrats in Ivy League admissions offices.” Ok, so which is it? Did Princeton and Harvard make Bezos and Zuckerberg or were Bezos and Zuckerberg already brilliant? Hopefully this question answers itself to those not named Brooks, Chetty and McArdle.

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors (www.appliedfinance.com). His latest book is The Money Confusion: How Illiteracy About Currencies and Inflation Sets the Stage For the Crypto Revolution.

Show comments Hide Comments