Surprise: The 1% Is Overrepresented in the Ivy League

Yves here. Despite popular perceptions to the contrary, most Ivy League schools weren’t “legacy” admissions until the last 20 years or so, when more and more universities started looking like hedge funds with an education subsidiary. For instance, it was actually harder to get into Harvard if you’d gone to Exeter or Andover than if you’d gone to a pretty good high school. About 25% of my class was work study (although the premise of “work study” always bothered me. The school even then was rich enough to provide full scholarships to close to all if not all of these kids, so why put them at a disadvantage by requiring that they work a set number of hours a week on, say, dorm crew?).

By Jack Gao, a Program Economist at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website

New research shows that access to elite colleges varies by parents’ income—reinforcing inequality across generations.

If your parents count themselves among the top 1%, you’re 77 times more likely to attend an Ivy League college than your peers from families in the bottom 20% of the U.S.’ income distribution. So much for meritocracy and equal access.

That’s according to the new research by Stanford economist Raj Chetty and co-authors. They show that 14.5% of students in America’s elite universities (eight Ivy League colleges, University of Chicago, Stanford, MIT, and Duke) are from families in the top 1% of income distribution, compared with only 3.8% from the bottom quintile. That’s a dramatic overrepresentation of the richest Americans.

Why the focus on Ivy League universities? Of course, the pool of top institutions of higher education extends far beyond that group. But in mobility terms, say the authors, you’re more likely to move from the bottom quintile into the top 1% if you attend elite colleges, including those that comprise the Ivy League. In other words, elite colleges can confer mobility in powerful ways.

The study’s authors point out that most colleges successfully manage to level the playing field, narrowing the post-graduation income gap between students from different family backgrounds by the time they reach their early-to-mid 30s. But shares of students from low-income families at institutions with some of the highest mobility rates, including SUNY-Stony Brook and Glendale Community College, declined sharply in the last decade, indicating that amid rising costs, colleges that offer the best pathways to success are getting out of reach for poorer families.

The authors’ investigation into the role of higher education in fostering (or hindering) intergenerational mobility in the U.S. builds on previous work in a similar vein. Last year, in a study titled “The Fading American Dream”, Chetty and other scholars showed that the proportion of Americans who earn more their parents, adjusting for inflation, fell from 90% for children born in the 1940s to 50% for those born in the 1980s. Their work underscores serious threats to the so-called American Dream, the cornerstone of which is faring better than the previous generation.

Scholarly efforts on the research of nature and causes of inequality—including the World Wealth and Income Database and distributional national accounts supported by the Institute for New Economic Thinking—illustrate the worsening economic inequality and have helped elevate the topic to the forefront of economic research. Further research that investigates what factors perpetuate, spur or block intergenerational mobility is critical in helping inform public policies that achieve distributive justice, basic fairness, and more vibrant economies. 

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29 comments

  1. JBird

    Chetty and other scholars showed that the proportion of Americans who earn more their parents, adjusting for inflation, fell from 90% for children born in the 1940s to 50% for those born in the 1980s. Their work underscores serious threats to the so-called American Dream, the cornerstone of which is faring better than the previous generation.

    I am trying to get a better understanding of the inequality of wealth. So this might be a stupid question. Is problem also that is no money available for those born later as well as the fact that the ladder’s missing rungs of education, and other opportunities? Restated, the fact that an ever large portion of the money pie is being taken by an ever smaller group makes the rungs inconsequential?

    I’m thinking of this because in poorer countries, you could be very educated, or skilled, but if effectively all the country’s wealth was locked into a handful of families you were working for them for whatever they would deign to pay you. I believe that is also what threatens our country although we still a very, very, very long way from such concentration of wealth. Although it seems families like the Kochs, the DeVos, and the Du Ponts, among others, would be just fine with that.

    1. WobblyTelomeres

      DeVos family – TULIP. Specifically, the U in TULIP (unconditional election). The pair of Amway founders, Richard DeVos and Jay Van Andel, both attended Calvin College in Grand Rapids. On a whim one day 40+ years ago, I searched the library there for “Naked Lunch”. Surprisingly, they did have a copy. In German. Seem to recall breaking out laughing at the card catalog.

      1. Collins

        I reviewed your TULIP site. It’s the Brahmin caste system. The similarities are remarkable.

    2. Steve Ruis

      Those born in the 1940’s (I was) didn’t have to live in a world in which rampant wage suppression was occurring and tax codes were modified to transfer wealth from the middle class to the wealthy (by raising one group’s taxes and lowering another’s). This isn’t a failure of the American Dream as it was never a real thing, it was an observation of conditions (Look, did you ever notice how one generation does better than the previous? Isn’t that interesting.) There wasn’t some plan or societal structures in place specifically to do that. Obviously education played a role (I was the first in my family to graduate college, for example.) as were a number of factors. But the American Dream was deliberately derailed by a small cadre of wealthy people acting in concert. There was too big of a threat to their wealth and power from the great unwashed masses (especially those of color).

    3. Objective Function

      It stands to reason that many more people aged 67-77 have exceeded their parents’ peak earnings than have 27-37 year olds. Sorry, I am having trouble believing there’s a dataset that accurately tracks what each group’s parents earned at the same age. Show me a link, anyone? (and the Census and IRS homepages won’t do).

  2. Jack Lifton

    Change?
    I attended Detroit’s Cass Technical High School (Detroit’s equivalent to the Bronx High School of Science), and at graduation in 1958 I had been accepted by the University of Chicago and the California Institute of Technology (I chose Chicago). A classmate of mine who drove together with me to school (This was after all Detroit, and I had a car) and who was very bright told me that Harvard had turned him down. “Why?”, I asked. He told me that he was told that “the Jewish quota for the class of 1962 was filled.”
    So now its how much money your parents’ have or whether you’re not-white. The prejudice is really the same, only the identity groups of the moment have changed. One thing that will never change: Harvard will always give preference to the Artificially Inteligent (AI).

  3. Carolinian

    Gore Vidal–surely one of our most brilliant and famous authors–never even went to college although his path may have been smoothed by a high achiever family (father worked for Roosevelt, grandfather was a senator). Since college is often seen as means of grooming people for their future place in society the question of who gets in and who doesn’t is obviously huge. The above article is yet one more indicator of the country’s retreat from democracy. As the saying goes: “a republic, if you can keep it.”

    1. John Wright

      Here are some famous drop-outs

      Bill Gates
      Larry Ellison
      Steve Jobs
      Steve Wozniak

      All of them had not finished college when they had their initial business success.

      Woziak did get a degree from UC Berkeley after his initial Apple experience.

      I remember a reader commenting to the NY Times (a bastion of “college is an unquestioned great value”) maintaining that if Gates/Jobs/Wozniak would have finished college they (miraculously in my view) would have done just as well.

      Huh?

      There is that element of being in the right place at the right time that I don’t believe always requires a college degree.

      Assuming someone is not in a coma for 4 years when they are not attending college, they might be learning or doing something even more valuable.

      Maybe in an uncertain world, people are looking for personal investments that permanently have a government asserted positive net present value.

      An expensive college education and buying a home both fall in that asserted category.

      Until they don’t.

      1. Mike G

        Another depressing factor for mobility is how ossified and credentialist America has become. Without a college degree you’re excluded from consideration by butt-covering, rule-driven corporate HR and their idiotic resume-scanning software.

        America used to be known as a place where the bright but uncredentialed would get a better shot compared to the formalism of other Western countries, but hiring is much more structured and risk-averse now.

  4. oaf

    …Donate(bribe) $10M or so; your kids are going!…but if you are worth billions; you don’t even have to do that!…

  5. Larry

    Let us not forget that the things that burnish a college applicants standing are often the product of the richness of ones parents. Working a job over the summer is not seen as interesting as an unpaid volunteer position or attending a summer full of sports, leadership, and academic enrichment camps. Plus the well heeled provide their children with additional socialization and support that puts them in the Ivy League “class” of what is acceptable politically, artistically, and socially. All of these factors lead to pulling in kids that fit the mold of what an elite student is.

  6. Bruce Carroll

    The question is not whether the collegiate institution admits a high percentage of rich students. Elite institutions normally attract rich applicants who have gained advantages in their academic preparation and aspiration due to their economic circumstances. The question is whether the collegiate institution has a counter balance of students in the lower 60%, 40% and 20% economic levels. There are some institutions (elite private and, unfortunately, elite public) which are predominately upper middle class with little comparative success in economic diversity. But there are some elite schools that have a tradition of welcoming gifted students from all economic backgrounds.

  7. DJG

    Yves: Maybe at Harvard there weren’t legacies, but I’m doubtful. When I applied for college in the Minoan Era (early 1970s), I distinctly recall getting catalogs that listed family names with preference (yes, specific families) and preferred admissions for offspring of certain classes. I can’t recall which college it was, but I suspect that it was Princeton–notoriously snotty and still dominated by eating clubs. Maybe Yale.

    The 14.5 percent in the One Percent understates how lopsided admissions of the privileged are. Here are the data for the class of 2020 for my alma mater:

    https://collegeadmissions.uchicago.edu/page/profile-class-2020

    Note that even now, UChicago [™!] still can’t accept a representative proportion of black students. Eight or so percent. But the other scandal is “international” students. Twelve, thirteen, fourteen percent. And do you truly think that the Chinese kleptocracy isn’t represented there? Or do you truly believe that the UChicago has admissions agents wandering the small towns of Kerala looking for deserving middle and working-class students? So “diversity” is used to magnify class tensions. Finally, note how the diversity figures don’t include white students–because international students are being used to pretend that U.S. racial categories don’t exist there.

    1. JBird

      Don’t forget that the number of non-resident students, those whose families can pay the higher non-resident fees and tuition, have increased in the California higher ed at the cost of native Californians. Although it is not just California that is doing this, I am just more aware of it here.

      I guess that just being Californian is not a good reason for you to use the state’s public colleges because they need that money. Oh yes they do! Of course, one of the news articles I read has a spokesperson saying the reason was the need for diversity in the UC system. Of course, my parents generation could go for basically free.

      It’s stuff like this that makes me want to see some tumbrels, and yet some wonder why some people don’t like the Democratic Party. I’m not trying to get angry, but fricking class warfare is what it is.

      http://www.mercurynews.com/2014/05/09/uc-out-of-state-students-increase-as-californians-admissions-slow/

      http://money.cnn.com/2014/06/12/pf/college/public-universities-students/index.html

  8. Fran

    I could see this just walking around campus in recent years.
    In the sixties, I could work full time (while going to school), and pay for tuition and my living expenses. I don’t think students today can earn enough to do that – at least not at an Ivy, as I did.
    Even then, however, I felt that an Ivy was less about a good education, and more about the contacts and being a member of the club.

    1. CitizenSissy

      I graduated college in 1984, when tuition and expenses could largely be covered waitressing. The twentysomethings in my office, whose student debt far exceeds my mortgage, regard that with wonder. We’re fast approaching (if not already there) a better-marketed, sparkly feudalism, IMHO.

  9. P Fitzsimon

    I think it was Groucho Marx who said he wouldn’t join any club that would admit him. If the elite colleges start admitting to many non-elites then will the Groucho rule apply.

  10. Altandmain

    I think that this goes to show how ridiculous the “meritocracy” claims are.

    Actually the rich have big advantages already. They can:

    1. Go send their kids to the top private schools, whereas normal people cannot afford the costs
    2. Hire tutors and other services like coaching for admission interviews
    3. Spend money on their kids’ so that they go around the world and have extracurricular activities to make them look “well rounded”

    Then there’s the matter that money won’t be a worry (Ex: no need to worry about parental financial issues) and problems like divorce are lower for the rich.

    It exposes the meritocracy myth. The sad part is that libertarians and many wealthy liberals are determined to defend this ideology at all costs.

    1. Michael

      It’s true that private high schools have an overwhelming representation: From a HuffPost article
      “One out of 20 members from the class of 2017 came from seven schools: Boston Latin, Phillips Academy in Andover, Phillips Exeter Academy, Stuyvesant High School, Noble and Greenough School, Trinity School in New York City, and Lexington High School.”

      But I think you’re missing the point. The elite 1% do not even have to do these things to get their children in. Their children get accepted, period. A tax deductible donation here. A phone call from dear-old-dad there.

      1. Yves Smith Post author

        It’s not as slam dunk as you think. A child of someone with good grades, board scores, and a father with his own private jet (a real rarity, most guys in PE use their fund’s jet as a personal service) applied to Harvard early admission and didn’t get in. Even though his father had gone to Cornell and given them dough, the fact that the kid had effectively dissed Cornell tainted him there. The father was scrambling to figure out how to get him admitted Somewhere Good, and it was not going at all well. I think he finally landed, but it was not looking like it was going to be an Ivy but a pricey school that had risen in the ranks like Washington University in St. Louis.

  11. petal

    Dartmouth leads the Ivies in the number of kids from 1% families and the 2nd lowest number of kids from the lowest 60%(behind Princeton). They have been letting in more legacies and rich kids in order to get more cash(more paying full boat, fewer kids that need financial aid). Jim Kim(now of the World Bank) ramped it up in order to help pay for his ridiculous pet projects. The increase in rich kids and rich foreign kids is very noticeable around here-the environment is really changing. The current guy(Phil Hanlon, formerly of U Michigan) isn’t any better-reckon he’s a lot worse. He actually said out loud that “undergraduates are a source of revenue”. The administration is a train wreck. Things are heading for a cliff/no going back-it will reach the point where it is just not fixable. These rich kids aren’t any smarter than anyone else-they’ve just had more opportunities given to them to buff a resume and they aren’t the ones having to waste 20 hours a week working a job instead of having that time to study in order to afford books or food.

    On a personal note, 20 years ago I had to leave Cornell after my father got sick with terminal cancer. I was from a rural working class family but due to the mounting medical bills/changing financial situation needed my financial aid re-done in order to be able to return. Cornell refused and so I couldn’t afford to go back. At the time, it was a cess pool of rich kids. The disparity was so noticeable and there was …segregation based on economic standing. If you were a poor kid, the school and classmates made it clear you were not wanted there and went out of their way to exclude you and hopefully drive you out. It’s something I’ll never forget. All these years later, I’m observing the same thing happening at Dartmouth. I get more cynical and bitter by the day. If I happen to come across a poor kid or a first-to-college kid here, I remember what I went through and go out of my way to help them out however I can.

  12. Jess

    Here’s another little tidbit about the Ivies: From 1980 through 2012, every candidate except two from the two legacy parties went to either Harvard or Yale at some point. (Undergrad, grad, law school). The only exceptions were Bob Dole, who went to Arizona State, and McCain, who went to the Naval Academy.

      1. JBird

        Presidental? So to wrap my head around this; 300 plus million Americans (so 75 million?? Eligible) Fifty States and assorted territories and all of them except maybe a territory has at least one good college.

        But for 28 years all occupants of the Oval Office went to just two universities in New England. I guess the Old Boys Network is alive and well.

  13. WeakenedSquire

    Too much focus on the Ivies IMO. It’s like worrying about who wins the lottery. No matter how the admission standards are jiggered, hardly anybody can get into an Ivy League school as an undergrad, and most of the people who do will be absorbed into the 1% if they are not there already.

    1. Yves Smith Post author

      You are missing the point. This shows that the elite is becoming an aristocracy. By contrast, if anyone (or at least a reasonable number of people) have a shot into getting into a “top” school, then you do have class/economic mobility.

  14. George Weinbaum

    One of my friends went to Columbia, class of 1971. He told me at freshmen orientation, the admissions counselor said something to the effect: merit admissions, nonsense. If we had them, I wouldn’t have a job. We could admit the entire freshman class from the graduates of three New York City high schools.

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