Thursday, July 8, 2010

What is the ROI from Higher Education?

Bloomberg this morning offers its analysis of this question. MIT comes out on top, with the highest net return on investment (about $1.7 million over 30 years), although it doesn't have the highest annualized rate of ROI. That honor goes to the Georgia Institute of Technology, which has an annualized net ROI of 14.2%. By comparison MIT's is 12.6%.

One story about the relative merit of attending MIT versus a public school with much lower in-state tuition is that entrance is equivalent to purchasing a lottery ticket (Brad DeLong discusses one version of this). MIT students will no doubt find an excellent job upon graduation, but some will find a job that is so excellent that they will soon be millionaires. Presumably the odds of becoming super-rich are higher from one of the elite schools than for one of the bargain schools. Of course, it could simply be that MIT is a great school and offers a superior education or perhaps that students who enroll are more motivated and thus just do better after graduation. Thoughts?

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