CONFIRMING THE EXCESS DEMAND HYPOTHESIS. I've made use of Richard Vedder's argument that the top colleges price their services in such a way as to generate excess demand. I only insist that people apply the argument consistently.

That last sentence, however, suggests that tuitions at the top schools are inefficiently low, not "jacked up."

Now comes Mark Schneider of the American Enterprise Institute offering what might be confirmation.

His purpose is to deconstruct the argument that a university degree is worth a million dollars to its holder, on average.

After subtracting tuition and discounting at 4.8 percent, the earnings increase, stratified by university type, looks like this.

Graphic by Richard Schneider

The returns to the land-grants and mid-majors ("public most selective" and "public very selective") are comparable. The returns to "nonprofit most selective" are substantially higher than the returns to "nonprofit very selective", suggesting that the "nonprofit most selective" are leaving some rents unextracted. That the returns to "nonprofit very selective" are on average less than the returns to attending a land-grant or a mid-major clearly call for further research.