Global Top 20 University High Net Worth Alumni Rankings (December, 2019)

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21

They do not tell us what they mean by “self-made”.

According to the Chetty article, 53% of Harvard undergraduates come from the top 10% by income, 39% from the top 5%, and 15% from the top 1%. Assuming, for now, that the distribution by wealth is similar to that by income, that is 15% of the students are from families with more that $11 million and 53% from families worth more than $2.6 million.

There are about 120,000 Harvard College Alumni, and, of them, 11% are on that list. Of Harvard College students, around 3% come from families with enough wealth to be categorized as UHNW, and 15% come from families which have over $11 million.

If only 21% of Harvard’s UHNW inherited their money, that means that inherited UHNWs are only 2.31% of Harvard graduates.

That means that at least 20% of the wealthiest Harvard graduates lose family money, and the vast majority of the wealthiest Harvard graduates are unable to substantially increase their wealth, compared to lower income Harvard graduates.

Forget about what Chetty wrote about attending Harvard not helping kids from wealthy families. If we are to believe this paper, that only 21% of UHNW actually benefitted from coming from a wealthy family, we must conclude that attending Harvard is one of the very worst things that a kid from a wealthy family can do, if they want to remain wealthy!

In short, I call BS on the whole “self-made” claim. The paper’s authors are almost certainly defining a Harvard graduate from a family which was worth $15 million who is now worth $45 million as being “self made”.

It does seem that people who write for the wealthy like handing out the title of “self-made” to as many of their readership as they can without entirely violating basic logic. The very wealthy rarely want to think of themselves as privileged, and most prefer to maintain the belief that “they did it all by themselves, with no help from anybody else”, even if, or especially when, most of the success has to do with a lot of financial and other support from their parents.

Unsurprisingly, Wealth-X has a VERY wealthy clientele…

Again, I don’t dislike the very wealthy, I just dislike pretentiousness, and when the very privileged deny their privilege.

PS. Looking at the Chetty graphs, while the poorer students do better, relatively, the very wealthy do better absolutely. So it is highly unlikely that the low income alumni would be the ones to dominate the ranks of the UHNW.

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22

Regarding inherited wealth @MWolf wrote:

“That means that at least 20% of the wealthiest Harvard graduates lose family money…”

Maybe I misunderstand your point, but it seems that a giant assumption in your thought process is that wealthy families have only one child to whom the parents leave their entire wealth. In reality, families tend to leave money and other assets to more than one beneficiary.

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23

The list includes all graduate and professional schools – Harvard Law School, Harvard MBA, Harvard Medical School, maybe Harvard Executive Education certificates, etc. I expect these grad/professional programs are the ones that have the largest contribution to “ultra wealthy” alumni – not Harvard College.

24

Harvard Alumni Association claims that there are 400,000 alumni.

Harvard College alumni should be separate from HBS (Harvard Business School) alumni and separate from Harvard Law School & Harvard Medical School alumni.

If the 400,000 figure is correct, then 120,000 Harvard College alumni seems to be a reasonable number for graduates of just the undergraduate school–Harvard College.

25

Your point is taken, but most of those 3% are families that have more than $50 million in wealth - 40% have more than $100 million. So they would need at least 3 heirs to split that.

Even so - would YOU consider a person who inherited $15 million or $10 million and is worth $30 million to be “self-made”?

In any case, the central point of my post was that this is selling a myth, that most of the wealthiest Americans are “self-made”, and that Harvard is somehow helping lower income Americans becomes very wealthy. It isn’t.

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26

@Publisher “Maybe from their financial aid applications ? :slight_smile:”

My point exactly!

Perhaps it is made clear in some of the source docs (?) but, for example, @MWolf 's post indicates “53% of all kids who attend Harvard are from families with a worth of over $2.6 million”. How do they know? Perhaps at the lower end of this threshold families may apply for FA - but I would think once net worth hovers at or above $5mm those families don’t bother to apply and many (I would think) are not public about their level of wealth. Any insights would be appreciated!

27

“For some students” isn’t meaningful. 10 students of the millions that start college every year is “some”. It’s a fact-free statement attempting to make the article appear to be meaningful, IMHO. I would bet that “my girlfriend is going there” is most important for some students.

28

Other than in tech, we don’t create many self-made billionaires and multimillionaires. In fact, we create far fewer of them than China, even adjusted by population size. That doesn’t mean Chinese universities are better, does it?

29

I think Publisher was making a joke. Even if they weren’t full pay, the average age was 62, so probably no kids in college.

The Chetty study MWolf mentions looks at tax reported earnings, not wealth. Chetty study earnings are based on tax filings, so they should be accurate, but numbers are several years old and are only for undergrad.

The Wealth X review is instead estimating wealth based on public information that is available. This might include things like public information about value of property or % stock ownership in company. I’m sure it is not precise, and may be quite inaccurate. A quote is below:

  • Every piece of information included in a Wealth-X Dossier is substantiated by two independent, credible sources. These sources include professional bios, property records, and news articles from established publications. Wealth-X does not include information from blogs or other user-edited content.
30

The Chetty study earnings are for Class of 2013, and only include tax filings of families who received Federal financial aid (Pell grant, federal loans, federal work study, etc.). They don’t have tax filing data from people who don’t accept federal financial aid…so the average income for those families would skew higher.

We have talked about this in other threads, but somewhere between 50% and 60% of undergrads receive federal financial aid at some point (not necessarily every year)…and many of those who do receive federal financial aid go to community college, not a 4 year college (again, in any given year).

31

Where do you see a restriction to federal FA recipients? The study implies that they look up tax filings by SSN, so they are limited to persons with valid SSN.

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nvm

33

I think @Mwfan1921 's point is that if you don’t apply for FA you don’t provide your SSN. I don’t believe parents need to provide SSNs unless applying for FA - returning to my original conundrum - for those that don’t apply for FA (those with higher income/net worth) how are these “lists” determining income/net worth. Clearly there is some public info. for some, but I would think that that is the minority.

34

The chetty data does include all students (or nearly all). They used 1098T data, and NSLDS data for low income students (some of whom pay no tuition, so wouldn’t receive a 1098T), and tied all that to parent and student tax returns. My bad, I confused it with College scorecard/Ipeds data which only includes those receiving federal financial aid.

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35

Note that one of the names on the study is from the US treasury. He has access to SSNs and tax records. The other part is linking the SSNs and tax records to college names. He does this by linking the 1098-T form filed by the college, which according to the study “Most colleges file a 1098-T for every student” – not just for FA recipients. They file a 1098-T for every student.

You can read a detailed summary of their methodology at https://oup.silverchair-cdn.com/oup/backfile/Content_public/Journal/qje/135/3/10.1093_qje_qjaa005/2/qjaa005_online_appendix.pdf?Expires=1629719196&Signature=uKheSd2Kyi1WcExLS0LKwUnu9JfJDcbe-GrCpH5BF3R87R9BNBn7xxuAffWVf6HNIHtLlk~~C51tl3xetzrnPjM-C-DlhD1hPuQNgMX8OQ79GMKNgcNi8~exKPaIMUu0Fm~HIRrSmuWvlIV4lcavl3QtEGzBvE02nLPjZ-S8fTe7aZrWw2vbtXrIlrJ3PQJixWPHoWgApA56A7ncG87X4IqMolWyyi-cTPb4fzAQu7Cs685W5bnzdbN~DBnxq92tzvj9R58NXwxXwjdgl90-0RPp4YSj8NgbwXhlKb60ecSyQ~OYeYG3ZXzUp2pDIuuDpf7d6zsjiX3nvWEMFoZiUQ__&Key-Pair-Id=APKAIE5G5CRDK6RD3PGA .

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Thank you @Mwfan1921 and @Data10. Just read a bit about how Chetty gained access to IRS files. Science | AAAS

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37

I was indeed talking about Harvard College alumni, since those are the people for which the Chetty article had data.

If they are including all Harvard graduates, that would make comparisons of total numbers ridiculous, since Harvard has a total of 21,000 students to, say, Princeton’s 8,500.

Also, how did Wealth-X get to its “estimation” that Harvard has 14,000 UHNW alumni, when they actually only know of 1,830. Moreover, how do they know that these are, in any way, a representative sample?

In fact, it is VERY unlikely that these are, indeed, a representative sample, since they are not taken at random, or otherwise sampled in any manner which would make any pattern derived from these 1,830 individuals generalizable to the entire population.

Thus, I do not find any of the claims that Wealth-X is making as to the characteristics of the UHNW alumni of Harvard, or any other university, for that matter, to be the least bit credible.

In fact, I do not find any of the “estimated numbers” to be credible either.

I am skeptical as to the estimated number of UHNW alumni for any of the universities on that list.

So what we have here is unsupported claims of the numbers of UHNW alumni, definitions of the characteristics of the samples that are unreliable, and finally, they are making about the characteristics of the unsupported total numbers, because they are making totally unjustifiable extrapolations from non-representative samples.

It looks to me to be a classical case of bad statistics, based on poor data.

It is a mishmash of meaningless numbers, created mostly to pander to the wealthy, who are the present and potential clients of this company.

It would be harmless except that it, as I wrote, promotes the myth of “the Self-Made Millionaire”.

Edited to add why I think that the myth is not harmless:

The myth of the “self-made wealthy” is the major component in the extremely toxic myth of “anybody can do well in the USA, all they need is To Work Hard And Save”. These myths are major weapons used by people who want to deny any support for low income individuals and families. These myths say, essentially, that poor people are poor because they are lazy and stupid, so they do not deserve anything.

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38

Maybe a controversial statement but I think schools on this list and other lists that convey similar results are suggesting a certain ecosystem. At least that’s the marketing slant. “Come here and you’ll be surrounded by people who do X”. I actually agree with that. Success becomes an expectation and peer activities often steer in that direction.

In no way does that mean you can’t / won’t be successful at “pick your run of the mill school”. Just look at the vast UG list of F500 CEOs. We likely all know super successful entrepreneurs that never even went to or graduated from college.

Success is typically about the individual. That said, I do think it’s easier to start and stay “on track” when surrounded by kids who are driven to succeed - whatever that means. I imagine there are far fewer kids just going through the motions at schools represented by these lists (perhaps self selection).

To me, that’s the value. When the same schools appear on essentially all the “best x” lists, there’s something to that. Why wouldn’t there be? In aggregate, that would become a factor in determining where to apply for me. Not the only factor, but certainly one to consider.

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39

Good points, though I don’t know that I entirely agree, at least with the part about success, and I don’t think that we agree on what that “something” that there is to the lists actually is. I do agree that being surrounded by other kids who have the same values and interests would, at very least, provide a “college experience” which is better for that specific person, whether that translates to later success or not, enjoying your college years is success in and of itself.

It also depends on what a person’s definition of “success” happens to be. As a very general rule, those who with to attend Harvard look at “success” as “garnering large amounts of one or more of the following: wealth, fame, and power”. A person with that sort of drive may not be all that happy in a college where the majority of other students with different drives.

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40

I think this depends on the personality of the specific student. Some students function best as a big fish in a small pond. They may have some unique opportunities related to excelling within the class. If placed in an environment where they are just average or even below average, they may struggle or get discouraged. Other students function best when surrounded by high achieving peers and achieve higher levels than they would in a different environment. And some kids function well in both types of environments.

If you want to measure whether the school contributes to “success”, looking a list of which schools have largest number of estimated number of “ultra high net worth” living alumni is not going to tell you anything meaningful. Instead you might do something like to control for some measures of student quality, some measure of major/field, and some measure of background; then see if a difference in measure of success occurred for the different colleges.

The same principle occurs for nearly any measure of “success.” For example, suppose you measured “success” as graduating from college. According to IPEDS, the colleges that do best on this metric of “success” are as follows.

Highest Graduation Rate Colleges
1 . Princeton / Yale – 97%
3. Dartmouth / Harvard / Harvey Mudd / Penn – 96%
7. Amherst / Bowdoin / Brown / Columbia / Duke / Georgetown / Middlebury / Julliard / Notre Dame / UVA – 95%
…
UConn – 83%

Princeton and Yale are highest at 97%. However, this does not mean if a particular kid who was accepted to Yale chooses to attend his flagship at UConn to save money, then that particular kid’s chance of graduation drops from Yale average of 97% to UConn’s average of 83%.

Instead the chance of graduating is largely going to follow characteristics of that particular student – whether the kid is a high achieving and excels academically; whether he is likely to need to leave for financial, family, or medical reasons; etc. The particular college may influence some of these. For example, Princeton’s top financial aid results in fewer kids needing to leave for financial reasons. However, if you just look at the overall graduation rate, without considering characteristics of the students attending the college, then it doesn’t tell you much of anything about whether the college is contributing to the high graduation rate, or it’s all because the college is admitting students who are likely to graduate.

It’s the same idea for looking at almost any measure of outcome, including estimates of earnings or wealth. If you don’t control for any measure relating to the academic quality or background of students attending the college, then the list is not telling you whether the college is contributing to the outcome, or it’s all because the college is admitting students who are likely to have the positive outcome, regardless of where they attend.

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