Most researchers oversell their results.  After re-reading Dale and Krueger’s latest piece on the selectivity premium, however, I suspect that they are greatly underselling their results.  They haven’t just undermined the value of academic selectivity; they’ve confirmed the value of personal ambition.

Background: Labor economists routinely find that degrees from more selective colleges raise income more than degrees from less selective colleges.  D&K replicate this result using standard control variables: your SAT score, high school GPA, etc.  But then D&K add controls for (a) the average SAT of the schools you applied to, and (b) the number of applications you submitted.  After adding these controls, the selectivity premium actually vanishes.  In their latest paper, this is true if you measure selectivity by (a) your college’s average SAT, (b) your college’s net tuition, or (c) your college’s Barron’s Index.

D&K conclude that the selectivity premium is probably greatly exaggerated, at least on average.  But I draw a much bigger lesson: D&K have (a) proposed very plausible measures of what we intuitively call “ambition,” and (b) shown that ambition so measured has a huge effect on income.  As far as I can tell, D&K’s measures are much stronger than the other measures of “non-cognitive ability” (especially the NLSY’s Locus of Control and Self-Esteem scores) that economists have been toying with over the last decade.

Here are D&K’s log income results for their 1989 cohort.  The “Basic” results don’t control for their measures of ambition; the “Self-Revelation” results do.

D&K focus on the fact that, after controlling for ambition, the premium for attending a school with an average SAT 100 points higher goes from +5.6% to -0.8%.  What’s truly remarkable, though, is the size of the ambition premium.  Applying to schools with an average SAT 100 points higher has a +9.9% premium.  Applying to four additional schools has a +9.8% premium.  Notice, moreover, that the payoffs for SAT scores and high school GPA only moderately decline after controlling for ambition; Dale-Krueger’s measures capture something fairly novel about a young adult’s character.

This presumably doesn’t mean, of course, that you can greatly increase your income by mailing out lots of Hail Mary applications.  Instead, it means that having the ambition to apply to lots of good schools greatly increases income.

To be fair, Dale and Krueger explicitly state that they’re trying to control for ambition.  But they remain focused on connection between ambition and the selectivity premium.  Given the strength of their results, though, they should be pushing for a complete overhaul of the return to education literature.  What is the effect of a year of education on income… controlling for ambition?  What is the effect of education on unemployment… controlling for ambition?  What is the college major premium… controlling for ambition?  What happens to the sheepskin effect… controlling for ambition?  Inquiring minds want to know!