The Wealth Effect

We live in a capitalist system here in the US. That means we have the freedom and ability to make our own way – and either become wealthy or fail, and try again. Wealthiness in the US isn’t exactly a variable – considering a family’s wealthiness usually regresses into nothing after  two or three generations. Yet, something like our parent’s income has a direct effect on if we get into this prestigious university or that prestigious university.

Wealth in the USA. (photo by er00mb0b)

Wealth in the USA. (photo by er00mb0b)

Now we have, through the studies that the NYTimes has reported, a way to measure the wealth effect – as given by John Jerrim, from the University of London, as quoted here:

“My background is economics, and if you look at the economics, kids that go to certain universities earn a premium on their wages during their working lives over and above the premium you get just by going to college,” Dr. Jerrim said. In the United States that premium is about 6 percent, he said.

“The other reason for looking at these particular universities is that they seem to influence access to certain jobs and to act as a signal to high-flying graduate recruiters,” he said. “If you take the job of being prime minister of Britain, for example, you almost have to have gone to Oxford.”

The article then goes on to say that:

“Dr. Jerrim found that students whose parents come from a professional or managerial background are three times as likely to enter a high status university in Britain or Australia as students with working class parents. For the sake of the study a “high status” university in Britain was defined by membership in the Russell Group of large research institutions; in Australia the study looked at students attending the “Group of Eight” coalition of leading universities.

The same threefold advantage applied to students attending prestigious public universities in the United States — those described as “highly selective” by the Carnegie Foundation for the Advancement of Teaching, which rates schools based on the test scores of incoming students. At elite private American universities, moreover, students are six times as likely to come from a professional as a poor or working class background, Dr. Jerrim found.”

It’s kind of scary – almost like a “you’ll never get out of the situation you’re in” type feeling, don’t you think?

Jerrim basically states that working class children are either not being accepted to universities, or frankly just aren’t applying. Either way, it’s causing a skew in the statistics.

It’s also easier for richer kids to attend school because their parents are more fit to support their educational endeavors. For the middle class, this means extensive and almost psychotic amounts of debt on their shoulders. Is it even worth it for them?

Either way, the wealth effect has become very luminescent.

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